Annual Report 2020 - Atos Medical...ATOS MEDICAL – ANNUAL REPORT 2020 3 We are Atos Medical Atos...

ATOS MEDICAL – ANNUAL REPORT 2020

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Annual Report 2020Lary 1 AB

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This Annual Report is issued by Lary 1 AB. Lary 1 AB is the top parent company in a group of companies referred to as the Atos Medical Group. In this report, we use “Atos Medical”, “us”, “the company” etc., as synonyms for the Group.

Highlights 2020 4

Words from the CEO 6

Our Purpose 8

People living with a neck stoma 9

Our Users – understanding the need for better care 10

Our Strategy 12

Our Business Model 14

Innovation Excellence 16

People and Culture 18

Sustainability 20

Our values 22

ContentsCorporate Governance 23

Board of Directors 24

Leadership Team 25

Risk Management 26

Directors’ Report 28

The Group 30

Parent Company 61

Auditor’s Report 67

Adjusted EBITDA bridge 69


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We are Atos MedicalAtos Medical was born out of a desire to make life easier for people living with a neck stoma. Sinceour foundation in 1986, we have cemented ourselves as the leaders in neck stoma care, with a worldleading position in laryngectomy care. We want to remain at the forefront and we know this involves more than first-rate product development, which is why clinical research and education of both professionals and patients are integral parts of our business.


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Atos Medical in brief

Our laryngectomy portfolio

Our values Our values represent commitments to all our stakeholders – by living our values, we demonstrate that we care about our customers and each other.

Read more on page 22

Global presenceWe serve customers in more than 70 countries and we are 850 employees and direct present in 22 countries across the world.

Direct presence

Presence through distributor

Subsidiary registration in progress

Our usersWe take pride in knowing our users and their needs. There-fore, we focus very much on individual needs and to under-stand the journey they go through to best support them.

Read more on pages 10–11

Our strategyWith a launch of our strategy ‘Living Well 2025’, we aim to double our business organically by 2025 through an increased focus on personalized care.

Read more on pages 12–13

Voice Prostheses (VPs)

AdhesivesHeat- and Moisture Exchangers (HMEs)

Accessories

Restores voice after a total laryngectomy

Used to attach HMEs to the stoma

Ensures pulmonary rehabilitation; reduces coughing, mucus and

infections

Skin care and other products for neck

stoma care


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Highlights 2020

Revenue by geographyRevenue by segment Financial summary

The reported growth in 2020 was 1%. The organic growth was 6% in fixed currency and excluding discontinued activities.

Adjusted EBITDA is excluding non comparable items. A breakdown of the non comparable items and a bridge from EBIT to Adjusted EBITDA can be found on page 69.

North America

New Markets*

* Japan, Australia, New Zealand, Brazil, Poland and rest of world via distributors.

Central Europe

South Europe

North Europe

9%

19%

22%23%

27%

Tracheostomy Care

Laryngectomy Care

Other

82%

13%6%

North America

New Markets*

* Japan, Australia, New Zealand, Brazil, Poland and rest of world via distributors.

Central Europe

South Europe

North Europe

9%

19%

22%23%

27%

Tracheostomy Care

Laryngectomy Care

Other

82%

13%6%

SEKm 2020 2019 2018

Revenue 1 761 1 736 1 608

EBIT 340 295 186

Adjusted EBITDA 711 680 574

Adjusted EBITDA % 40.4% 39.2% 35.7%

COVID-19 has affected the market in different ways. Hospitals has been under immense pressure and re-strictions. Surgeries were postponed in several coun-tries during the Q2 lock down, and less so hereafter.

People living with a neck stoma are considered an “at-risk population” due to COVID-19. Many have been reluctant to leave their homes. This has led to more virtual interactions but also examples of less frequent product replacement.

How our customers were affected How we have helped our customers

During COVID-19, several initiatives have been initiated to secure that our customers kept receiving the care they needed

• Assured supply of products to our customers through contin-gency plans and backup from different storage facilities.

• Increased production of HMEs with improved viral protection for laryngectomy and tracheostomy. We worked with author-ities in many countries to secure reimbursement of these products with additional protection.

• Accelerated virtual engagements with customers quickly after the pandemic broke out, facilitating both individual

and group meetings with users and health care professionals i.e. addressing challenges related to the pandemic and supporting customer’s health condition.

• Prioritized employees’ safety and wellbeing. We provided safety equipment, we used video communication early and ensured most possible colleagues could work from home early, and we launched initiatives to support the wellbeing of all employees.


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Delivering on our promises2020 turned out differently than expected, marked by COVID-19. I am proud of how my colleagues have man-aged in a challenging environment and have adapted to a different way of working. Our two focus areas were to keep employees safe and to continue serving our customers, and we have been able to do both during the full period since COVID-19 arrived.


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Britt Meelby JensenCEO

We started 2020 with an ambitious agenda, and we were off to a strong start, progressing on key projects and with solid double-digit growth in the first quarter. Hereafter, col-leagues across all functions went out of their way to serve customers with the required products and support. Examples of how we quickly adapted to the new situation include increased production of breathing products with extra virus protection, virtual face-to-face engagements with customers and expert panel sessions about how to optimize treat-ment for people living with a neck stoma, under COVID-19.

Bringing innovation to our customers

Our purpose is to make life easier for people living with a neck stoma. With over 30 years’ experience, we have an in-depth understanding of our users’ needs and the different stages they go through from getting a diagnosis prior to surgery, until they are home living the life they want to lead. We use our ex-pertise and insights for the innovation and we are launching a new product portfolio - Provox Life, for better breathing. It is the biggest launch in the history of Atos Medical, based on IP and comprehensive clinical evidence, and designed to serve different situational needs 24/7.

2020 was also the year where we built a strong foundation to accelerate digital innovation in the years to come. We launched new digital tools and a new platform, to improve how we serve our customers in a way that is tailored to their individual needs. With our current set-up, we can engage with customers ac-cording to their needs and preferences, and we have significantly improved both business transparency and efficiency.

Solid organic-growth

In addition to these major advancements, we proudly expanded our customer base in

existing markets by 10%, we strengthened reimbursement in several markets, e.g. Japan, South Korea, France, and we made promising advancements towards building a presence in China.

Despite COVID-19, we delivered organic growth of 6% and strong earnings (SEK 711m Adjusted EBITDA) with strong cash conversion. Revenue growth was driven by Laryngectomy (82% of business) and Tracheostomy (13%), and pulled down by ENT portfolio (now 6% of our total business). Tracheostomy is an area that has not been a strategic priority, however, this was changed as part of the new five-year strategy, “Living Well”. The development over the year showed the resilience of our direct-to-consumer model in a chronic care setup.

“Living Well” – a 2025 customer-focused strategy

We completed a strategy process with the organization and the board to define the future potential and how to maximize our value creation over the next years. Our strategy was launched at the end of 2020 and is called “Living Well”. It focuses on ex-panding customers served, ensuring a good life quality for people living with a neck stoma, and tailoring our care to the needs of each individual customer. Delivering on these objectives will enable us to organically double the business by 2025. Laryngectomy leadership in existing markets remains a key priority, but we will also accelerate growth through improved patient access in new markets where only a few people living with a neck stoma have access to treatment and are today left without care, following their surgery. In China, product registration and go-to-market preparations are in an advanced stage.

Tracheostomy is a large market opportunity, where we can leverage our laryngectomy

direct-to-consumer capabilities and relation-ships with health care professionals. We have a competitive product portfolio to establish a leadership position in tracheostomy. Historically, we have had limited focus on this area, which consists of a much larger patient population than laryngectomy, and where the majority are currently not receiving ad-equate breathing rehabilitation.

Customer-centric digitalization is a key ele-ment of our strategy. Building on recent invest-ments, in the long-term we can leverage our leading personalized care set-up in adjacent segments, strengthening our position as a leading outpatient chronic care company.

Our purpose-driven agenda

Our purpose emphasizes our passion across four dimensions: Making a difference in people’s lives; sustaining an engaging and inclusive workplace, shaping a brighter future for our planet, and creating a sustainable future for Atos Medical. In 2020, we made significant progress across all areas, securing strong customer satisfaction and a top-tier employee engagement score. We became CO2 free in our production and demonstrated robustness in our business model throughout the COVID period, laying a strong foundation for future sustainable growth.

I would like to thank all stakeholders and my colleagues for their strong commitment, dedication, and contribution to making life easier for people living with a neck stoma.


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Our Purpose

Breathing – Speaking – LivingWe are passionate about making life easier for people living

with a neck stoma, by providing personalized care and innovative solutions.

At Atos, we have a strong purpose that emphasizes our focus on making a difference.


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Laryngectomy• A total laryngectomy is a non-elective surgery

performed in the advanced stages of cancer. The procedure involves removing your voice box – also called the larynx.

• Going through a total laryngectomy means breathing through a stoma instead of your nose and mouth, and having to learn how to speak again.

• While a laryngectomy does spell changes in your day-to-day life, it is still possible to live a happy and fulfilling life. You can continue to be active by going for walks and exercising, or meet friends and do most other things you enjoyed before the procedure.

Dynamics and market opportunity• Stable flow of new customers living with

a neck stoma, following their surgery

• Chronic care patients with a need for products for the remainder of their life

• Strong customer loyalty resulting in a significant retention rate of patients

• Many patients remain untreated, providing strong potential for growth, both in existing and new markets

Tracheostomy• A tracheostomy is a medical procedure which consists of creating an opening in the neck for direct access to the windpipe (trachea) to facilitate breathing.

• A tracheostomy can be either temporary or per-manent and there are several reasons for having the procedure, all involving restricted airways. It may be performed during an emergency when your airway is blocked, or when a disease or other problem makes normal breathing impossible.

• After a tracheotomy you will have a tracheostoma, with a tracheostomy tube entering your windpipe (trachea). This will change your way of breathing and speaking.

People living with a neck stomaWith a world leading position in neck stoma care, we provide care to people following a laryngectomy or tracheostomy. We address their breathing and speaking challenges as they adapt to life changes.


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Our Users – understanding the need for better care

Annas storyAnna is 37 years old and lives in southern Sweden. Seven years ago, she was diagnosed with cancer, squamous cell carcinoma of the upper esophagus, and had to undergo an extensive total laryngectomy. After the surgery, a three-month recovery process awaited at the hospital, which was a very difficult time in Anna’s life with lots of up and downs.

Today, Anna is enjoying her life with her partner. She works in a furniture store and when she’s not working, she loves spending time with her family and friends. “I think that loving your everyday life is a pretty good thing.”


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At Atos Medical, our mission is to make life easier for people living with a neck stoma. Anna is one of those people. Her journey through total laryngectomy, like that of most laryngectomees, took twists and turns as she moved through the four phases before and after the surgery.

Getting ReadyUser phase Gaining Control Establishing Normal Living well

Location At homeAt home

Surgery

Anna underwent surgery four weeks after she was diagnosed. She received a lot of informa-tion from her doctor about the surgery and the rehabilitation process. She also met people from the local Lary club who spoke about living with a laryngectomy.

Coming home from hospital was very difficult, both fright-ening and traumatic. Anna had a lot of anxiety and was very scared of being alone. All the questions that worried her were answered by her doctors and nurses and they helped her a lot during the worst time in her life.

With help from her speech- language pathologist, Anna quickly learned how to produce a voice, how to breathe prop-erly, and articulate better to be able to communicate smoothly with her family and friends.

Today, Anna is living a good life. She has made great progress towards a future full of hope. She exercises twice a week, and she also likes going for long walks.

“It was impossible to prepare for what it

would be like to lose my voice and other ail-

ments that awaited me after the surgery. When I received my diagnosis, I just wanted to die be-cause of the suffering

and grief.”

“I was scared and cried a lot and was constant-ly thinking about what life would be like, and if

I would be able to speak again.”

“When I got my first Provox voice prosthesis

I could make myself heard again. It was an

enormous relief.”

“Of course I feel that there’s a life before and

after the surgery but the support from doc-tors, nurses, and SLPs has helped me to find hope for the future.”

“I’m dreaming about a big house with a garden where I want to plant a lot of flowers and enjoy life with my loved ones.”

In hospital


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Our Strategy

People have different preferences and interests in life, and our experience has proven the need for individualized care, with a focus on three overall strategic objectives:

• Improving lives for more users by growing our customer base, strengthening partner-ships with health care professionals and increasing user awareness.

• Securing better care by improving product routines, securing a strong launch of our new and improved product range and continuing to strengthen customer loyalty.

• Personalizing care through accelerated digital customer interactions and person-alized customer engagements.

With this strategy, we will be able to double our business organically by 2025, serving more users who today live without access to products, and we will address the unmet needs of our existing users living with a laryngectomy. Fur-thermore we will build a leading position in tracheostomy, where we only serve a fraction of users in the relevant long-term segment.

Finally, we have opportunities to build on our core strength and strong direct-to-consumer model in other areas, adjacent to speaking and breathing solutions for people living with a neck stoma.

During the fall, we launched a new 2025 strategy, “Living Well”. The strategy builds on our strong customer understanding and our insights into the journey people with laryngectomy goes through. “Living Well” refers to our ambition secure that everybody gets to a high quality of life, breathing and speaking through a neck stoma.


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Expand leadership in laryngectomy in existing markets

Grow presence in future markets and establish position in China

Establish leading position in tracheostomy

Leverage personalized care set-up in adjacent segments

Digitalizing how we serve customers

Expand leadership in laryngectomy in existing markets

• Our current leadership position in laryngectomy is the foundation for future success

• Reimbursement of our products is continuoulsy improving in existing markets

• Significant growth opportunities in existing markets, (e.g. over 50% in the U.S. are not treated) from increased share of people receiving care and improved care to existing users (e.g. users in the U.S. consume 50% less products than other key markets)

• Growth driven by investment in innovative solutions, commercial infrastructure and digital tools

• New portfolio, Provox Life, for better breathing and improved pulmonary health to drive growth.

Grow presence in future markets and establish position in China

• Build on our proven go-to-market model when entering in new markets

• Market access and reimbursement are key drivers of accelerated growth in these markets, where most people living with a neck stoma do not receive care after the surgery

• Product registration ongoing and go-to-market approach in place in China

Establish leading position in tracheostomy

• Strong potential for improved outpatient trache-ostomy care – many similarities to laryngectomy customer journey and direct-to-consumer approach

• Significant synergies with existing laryngectomy go-to-market setup

Leverage personalized care set-up in adjacent segments

• Our long-term ambition is to expand into chronic outpatient care

• We are well positioned to leverage market trends in adjacent segments, building on our proven go-to-market model and unique strengths

• Recent investments in digital infrastructure are leveraged for intelligent and personalized solutions, to be expanded to 24/7 care across the globe

• Improved clinical excellence through digital services to health care professionals

• Improved efficiency and accelerated scale-up

Our strategy is based on five strategic pillars

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3

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Digitalizing how we serve customers


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Innovative product portfolio with strong

clinical evidence and IP

Innovation excellence Our customer centric innovation process identifies and prioritizes clear user needs based on anthropological research and close co-operation with our markets.

Our innovation team has un-matched ex-perience, and are working closely with both production and markets to ensure customer and user needs are also met post launch.

Clinical excellenceWe engage with health care professionals daily to educate on product and user needs.

We are investing in expanding our leading clinical evidence position, and combining this with proprietary education events for our professional customers and users.

Direct-to-consumer excellenceWe regularly engage directly with tens of thousands of users, tailoring products and services to their needs, and often supply-ing their products directly in their home.

Our personalized care approach is to educate and offer product support to improve the quality of life for our users, while we ensure regular follow-up for lasting impact effect.

Digital leadershipWe offer digital ways for our customers and users to engage with us across app, web, video etc. in addition to our existing customer engagement.

Based on our scalable infrastructure we are investing in digital customer experi-ence to increase the effective customer reach at the terms of the user.

Deep insights and knowledge of people

living with a neck stoma

By far the strongest presence in the neck

stoma segment

Unique direct-to-consumer go-to-market model

Digital capabilities,solid platform and integrated set-up

Employee engagement rank

best in class

CORE STRENGTHS

CORE ACTIVITIES

VALUE CREATION

We are passionate about making a difference in people’s lives

We are passionate about sustaining an engaging and inclusive workplace

We are passionate about shaping a brighter future for our planet

We are passionate about creating a sustainable future for Atos Medical

Our Business ModelOur business model has proven strong and resilient. It ensures that we deliver value for our customers and solid business performance, also during the most challenging times.


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Innovation Excellence Provox® Life™ – a life changing solution

Our innovation excellence is based on a thorough understanding of the needs of both users and health care professionals. This is based on more than 30 years of leadership within laryngectomy care and a global survey performed recently in-volving ~1,800 people with a laryngectomy. We focus on their daily lives – their hopes, worries, and struggles.

We identified that many people living with a neck stoma are still struggling to live well after a total laryngectomy. Our purpose “breathing – speak-ing – living”, inspire us to continue addressing observed challenges, to allow people living with a neck stoma to breathe better, speak better – for a better life.

In late 2020, we started to introduce Provox Life, an entirely new generation of products that supports improved lung health by driving 24/7 usage of HMEs enabling people to breathe better whatever they do. The new Provox Life product range has been designed to provide a personal-ized solution that improves humidification, breath-ability, comfort and fit across the different situa-tions people are in throughout the day. It consists a complete range of new HME’s with functionality optimized for different everyday situations, a range of improved adhesives and accessories. Provox Life has been developed in collaboration with our customers, and efficacy has been documented through the most extensive clinical studies to date within laryngectomy, across 11 countries.


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DigitalizationWe continue to concentrate on innovation as key to our future growth. Our strong customer focus is supported by an increased emphasis on documenting clinical outcomes and product performance. We proactively explore and apply new technologies to improve the performance of our products, for better results for people living with a neck stoma.

Innovation is a key component of our strategy. We focus on improving products, solutions, and services, to enable our people to live well with a neck stoma. All customers are different, and we strive to provide a personalized care solution for each individual customer. In recent years, we have increased our focus on education and tools to help people before and after their surgery, and to help health care professionals in treatment of their patients.

An example of these initiatives is the devel-opment of the MyLife app. It provides instant access to information about how to use our products, it includes support on how to ad-dresses the most common complications and it offers tools to help improve health. A tool that has been requested by both healthcare professionals and their patients is a series of interactive voice rehabilitation exercises. These have been designed together with leading healthcare professionals and enable people with a laryngectomy to continuously train their voice at their own pace, for better rehabilitation.


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People and Culture

Leading the Atos Way

To enable the successful execution of our Living Well strategy, we have trained all global leaders in how to lead the Atos Way. The training was based on 3 elements: Leading for Results, Leading Others and Leading for the Future. Atos Medical’s purpose and values and our leadership ambition have been em-bedded in the leadership development initiative which has created a wider sense of purpose in the organization and increased global collaboration and employee engagement.

850employees at year-end


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Employee Engagement

Over the past two years, employee engagement has improved significantly (Index 66 -> 74), with a response rate of 92% which puts us among the Top 25% best performing compa-nies in terms of engagement and loyalty*. All drivers of motivation have increased and “Reputation”, “Job content” and “Collabora-tion” stand out as the main reasons for our strong engagement.

*According to Ennova Global benchmarks.

74Index 74 in employee

engagement score

39%females in leadership

positions

92%employee retention

53%of critical managerial positions filled with internal candidates

Employee Retention

As a growing company, Atos has expanded the total workforce by app. 450 people over the past four years, and with our Living Well strategy we expect to continue to grow, espe-cially in New Markets and Tracheostomy care. Employee retention is key for providing excel-lent customer care, and during the past two years, we have seen an increase in our em-ployee retention from 80 to 92%. Especially our top 5 largest markets contribute to the increased employee retention.

Talent for Future

Attracting and developing talent is the key to future global success. This year we have increased our attention on creating future leaders, ensuring that we hire for a career at Atos Medical and keep developing internal talents. This is reflected in our ability to fill 53% of managerial positions with internal candidates.

Diversity

2020 is the first year where we measured gender diversity, and our current share of female leaders is 39 %. We will continue to build a truly diverse organization and aim to have equal gender representation in all leadership positions by 2023.


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Atos Medical is committed to sustainable and ethical business practices, and have integrated our key sustainability ambitions as one of the four priorities for value creation in the 2025 Living Well strategy: Making a difference in people’s lives, sustaining an engaging and inclusive workplace, shaping a brighter future for our planet, and creating a sustainable future for Atos Medical.

Our ambition is to constantly increase the value we create for our customers and ultimately serve twice as many users by 2025 means that we, as a manufacturer of disposable medical devices, face the challenge to grow the number of users served

while at the same time minimize the impact on the climate and our planet. Atos Medical has accepted this challenge by setting four clear climate and environmental ambitions.

2020 marked a very important milestone in our Planet commitment as we secured 100% renewable energy in our production through sustainable energy supplies and by relying only on geothermal heating and cooling. This great achievement effec-tively makes our production CO2 neutral, and sets a solid stepping stone for defining clear KPIs on all four strategic ambitions and use them as our baseline in future sustainability reporting.

”We contribute to the wellbeing of our customers through personalized care, empowering them to breathe, speak, and

live healthy lives”

”Our approach to environ-mental challenges is ambi-

tious and precautionary, and we seek to use

resources efficiently”

“We have a clear climate commit-ment, and work to contribute to a

cleaner and more sustainable econ-omy through the use of renewable energy and by taking other meas-

ures that reduce emissions”

”We provide a good workplace and equal opportunities; we

systematically improve working environment and work safety in

all of our organization”

”Respect and integrity are at the core of everything we

do; and we work to pro-mote ethics and to reduce corruption and bribery”

People Planet Business Ethics

Sustainability

A Comprehensive ESG strategy Built on the United Nations Sustainable Development Goals (UN SDGs)We have increased our strategic ambition in the Planet pillar of our ESG program, and we will maintain a high activity level in the two other pillars: People (our customers and our employees), and Business Ethics.

Double the number of customers served by

2025

2025 2025 2030

80%Recyclable materials

in packaging

90%Packaging recyclable

100%Renewable energy

in production

ZeroScope 1&2 emmissions


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Organization and ReportingSustainability (ESG) activities are anchored with members of the Global Leadership Team, and overseen by the Risk, ESG, and Compliance Committee. Performance is monitored on defined KPIs, and is reported quarterly to the Audit Committee, while the Board of Directors assesses the strategic ESG priorities annually. Environmental, Social, and Governance risks are inte-grated in Atos Medical’s general risk reporting and risk management systewm, cf. p 26.

2020 ESG Performance at a GlanceWe work systematically with sustainability targets guided by the strategic priorities in the three pillars. We aim to ensure that our goals include opportunities to make positive contributions to the SDGs as well as to reduce current and potential negative impacts. For more comprehensive KPI reporting we refer to the Sustainability Report. In 2020, we made progress in the following areas:

Business Ethics

We re-worked our Code-of-Conduct e-learning expanding coverage from English only to our six key languages.

We further strengthened our GDPR compliance by launching e-learning for all relevant em-ployees, and running information campaigns.

We included all major suppliers in our due- diligence system to improve detection and prevention of unethical behavior in our supply chain.

People

Because breathing through an open stoma leaves tracheotomy patients vulnerable to infection, Atos Medical, with support from our owners at PAI Partners, made a charitable donation of Freevent XtraCare® HMEs to hospitals challenged by the COVID-19 pandemic offering patients increased bacterial and viral protection.

We took action based on the 2019 employee engagement survey, and improved the 2020 satisfaction and motivation score by 5.7%, bringing us well within the top-quartile benchmark and delivering on our commitment to maintain a good and inspiring workplace.

Planet

We secured 100% renewable energy in our pro-duction through dedicated energy supply con-tracts and by fully relying on geothermal heat-ing and cooling.

In line with our commitment to sustainable packaging we introduced bio-degradable packaging for the new Provox® Life HMEs.

We reduced energy consumption by changing to LED light sources in our warehouse in Sweden, and made the technical preparations for reducing the air-renewal cycles in production clean rooms while staying within the ISO standard.

The statutory Sustainability Report, which tracks concrete KPIs for 2020 and presents focus areas for 2021, of the Atos Medical Group in accordance with the Swedish Financial Statements Act is available at www.atosmedical.com


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We listenAt Atos Medical, we are open-minded and curious. We actively seek to learn from each other and our customers. We use the understanding we gain to challenge each other to always improve.

We careWe inspireAt Atos Medical, we work with passion and dedication. We have ambitious goals and set the highest standards for ourselves. We aim to offer a compelling picture of the future that motivates others to take action.

We focusAt Atos Medical, we choose to concentrate on the areas where we can bring the most value. Our choices are clear and transparent, and they help us achieve our ambitions.

We engageAt Atos Medical, we connect with our stakeholders and involve them in our activities. We support and empower our customers and each other every day. Respect and integrity are at the core of everything we do.


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Corporate GovernanceAtos Medical’s Corporate Governance processes are aimed at continuously directing, controlling, and improving strategy and decision-making, defining clear responsibilities and identifying and evaluating opportunities and risks for the Group. Our Governance processes are centered around our purpose of making life easier for people living with a neck stoma, by providing personalized care and innovative solutions. Corporate Governance is exercised by our Shareholders, and the Group’s two-tier management.

Shareholders

The shareholders have ultimate authority over the Company and exercise their rights at the General Meeting, which approve the annual reports, resolve on any amendments to the Articles of Association, and elect board members as well as the independent auditor.

Management

Atos’ two-tier management structure consists of the Board of Directors (BoD) and the Global Leadership Team (GLT). The two bodies are separate and have no overlapping members. The GLT oversees day-to-day management, while the BoD supervises the GLT and is re-sponsible for the overall management and strategic direction.

Board of Directors

The Board has six members, of whom four are elected by the shareholders and two by the employees Sweden (cf. p. 23). All shareholder- elected members of the Board of Directors serve for one-year-terms and may stand for re-election at each annual General Meeting. The Board convenes at least four times per year.

Board Committees

The Board has established two committees: The Audit Committee (AC) and the Remuneration Committee (RemCo). The AC consists of three Board members who convene together with members of management and the External Auditor in conjunction with all Board Meetings. The AC assists the Board on the financial reporting and audit process, internal controls and risk management, and oversees the Group’s legal compliance program and monitors progress on ESG/Sustainability KPIs. The RemCo consists of two Board members and convenes twice per year to support the Board establishing, implementing and executing its remuneration policy for management.

PAI Partners, a leading European private equity firm, has been the majority shareholder of the Atos Medical Group since 2016. PAI is one of the oldest and most experienced firms in Euro-pean private equity, and is characterised by an industrial approach to ownership combined with a sector-focused organisation. PAI pro-vides companies with the financial and strate-gic support required to pursue their develop-ment and enhance strategic value creation. PAI manages and advises close to €14 billion of dedicated buyout funds. Since 1994, PAI has completed 81 LBO transactions in 11 European countries, representing over €62 billion in transaction value. PAI has 100 experienced pro-fessionals from 16 countries and teams in Paris, London, Luxembourg, Madrid, Milan, Munich, Stockholm and New York City.

Global Leadership Team

The Global Leadership Team (GLT) consists of the CEO, the CFO and eight other members (p. 24). The GLT is responsible for the day-to-day management and compliance with guidelines and follow-up on recommenda-tions from the Board of Directors. The GLT presents, submits, and recommends propos-als for Atos’ overall strategy and long term objectives to the Board. The GLT prepares

management and operational reporting to the Board on an ongoing basis, and pro-vides Risk, ESG, and Compliance reports at regular intervals.

More information on Risk Management on p. 25 and on Sustainability on p. 20. Atos Medical is not required to follow the Swedish Corporate Governance Code, and is not a subject to statutory corporate governance reporting.

Shareholders(General Meeting)

Board of Directors

Global Leadership Team

Audit Committee

Remuneration Committee


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Board of Directors

Andreas Kumeth

Board memberPrincipal, PAI Partners. Member of the Healthcare Team. Other board assignmentsMember of the Advisory board of Zahneins.

Frédéric Stévenin

Board memberManaging Partner & Chief Investment Officer, PAI Partners.Other board assignmentsMember of the Supervisory Board ELITechGroup, Ethypharm and Labeyrie Fine Foods. Chairman of the Board Labeyrie Fine Foods. Member of the Board of Directors Froneri, Kaufman & Broad, and Marcolin. Member of the Advisory board of Zahneins.

Ragnar Hellenius

Vice chairman of the BoardPartner, PAI Partners. Head of the Nordic Team. Other board assignmentsMember of the Board of Directors PAI Partners AB, ADB Safegate (2014-2017) and Perstorp Holding AB.

Lars Frederiksen

Chairman of the Board (Independent).Other board assignmentsChairman, Hedorf Foundation. Member of the Board of Directors Tate & Lyle (UK). Member of the Board of Directors Falck A/S. Chairman of the Board of Directors Matas A/S. Member of the Supervisory board of PAI Partners. Chairman, Danish Committee for Good Corporate Governance.

Göran Jönsson

Union representativeGlobal ERP System Owner, Atos Medical since 2002.

Johan Månsson

Union representativeDesign Engineer, Atos Medical since 2018.

The Board of Directors as reflected on this page are appointed in Lary 3 AB.


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Leadership Team

Britt Meelby Jensen

CEO since 2019, joined Atos Medical in 2019.

Egil M. Madsen

CFO since 2019, joined Atos Medical in 2019.

Ulrik Berthelsen

Chief Commercialization & Innovation Officer since 2019, joined Atos Medical in 2016.

Christian Skak Olufsen

Vice President, General Counsel, Legal Affairs and Compliance since 2016, joined Atos Medical in 2016.

Christian Zischek

Senior Vice President, Europe Central since 2019, joined Atos Medical in 2019.

Pascale Chapuis

Senior Vice President, Europe North and South since 2019, joined Atos Medical in 2017.

Sune Schmoelker

Senior Vice President, New Markets since 2019, joined Atos Medical in 2016.

Martin Richardson

Senior Vice President, Operations & Quality since 2017, joined Atos Medical in 2017.

Sean Killian

Senior Vice President, North America since 2020, joined Atos in 2020.

Dorthe Rønnau

Senior Vice President, HR & Communications since 2016, joined Atos Medical in 2016.


26

Strategic Risks Mitigating actions / policies

Competitor Threat. New, low cost competitor with global distribution may enter the market. Existing competitor may improve portfolio and expand their distribution.

Secure highest product quality. Maintain best-in-class production costs. Strong innovation and leading edge products. Engage directly with Customers.

Technology Disruption. Future technology may change the industry and impact Atos. Monitor R&D environment. Maintain highest product quality level. Focus on leading-edge innovation.

Market Access. Changes in health insurance levels, increased regulation complexity, or budget restrictions may impact our business negatively.

Developing and improving added-value-products backed by clinical evidence. Best-in-class cost structure to reduce insurance and reimbursement sensitivity. Maintain strong regulations competences.

Atos Medical’s enterprise risk management process aims to manage strategic, operational, and financial risks to secure the sustainability of our business. The overall objective is to identify risks that may threaten our strategy, impeding our long term ability to succeed, operational risks that may impact short term targets,

Risk Management

COVID-19 Pandemic Response

In February 2020 Atos Medical initiated a structured response to the pandemic focusing on protecting patients, employees, and revenue, including e.g. securing patient and HCP interactions through virtual channels, focusing on airway protection against infections, maintaining contingency plans for sustained product deliveries in all markets, and ensuring secure working conditions through home work places, and contingency plans for production and warehouse facilities. Atos Medical continues to monitor developments both at the global and at the local level.

Audit Committee (quarterly)

Board of Directors (anually)

Gross risk

Mitigation already in place

Residual risk

Management (ongoing)

Group Finance (ongoing)

Risk ESG & Compliance Committee (quarterly)

Risk ESG & Compliance Committee (quarterly)

Group Finance (ongoing)

Audit Committee (quarterly)

Mitigation actions Target

and financial risks. We quantify the impact and likelihood of identified risks, and then define adequate, concrete, mitigating actions and assign clear ownership in in the organization. Risks are monitored and regularly reported to the Audit Committee and the Board of Directors to provide them with a strategic tool for assessing whether target risks are at acceptable levels, and whether the defined responses are adequate.


27

Operational Risks Mitigating actions / policies

Production Disruption. Catastrophic event may lead to property damage, short term revenue loss, and long term loss of business.

Up-to-date fire and emergency protocols. Adequate insurance. Sourcing contingency plans.

Supplier Disruption. Interruption of major supplier could impact the business short term.

Adequate contracts in place. Supplier audits. Keeping only low-volume suppliers. In-source large volume supply. Maintaining adequate insurance.

Quality and Product Safety. Major non-conformity may lead to a product recall. Serious adverse effect of an Atos Medical product may impact the life and health of patients impacting cost, revenue, and reputation.

Keep MDSAP and ISO-compliant quality management system and prepare for MDR. External and internal quality audits and inspections. Adequate Insurance.

Data Protection. Major leak, major breach, or systemic data protection failures may impact the business directly (fines) and indirectly (loss of trust and reputation impact).

GDPR and HIPAA compliant Personal Data Protection policies and processes, and Data Processing Agreements. Training officers and employees. Adequate IT security measures.

IT Infrastructure. Failure or break-down of key systems (CRM, ERP, BI) may lead to costs, short term loss of revenue, and long term loss of business.

Outsourcing IT operations to realize scale and expertise benefits. Ensuring technical and organization security (incl. back-up, recovery, and re-instatement). Auditing suppliers.

Cyber Security. Hostile intervention, e.g. ransomware attacks, may impact Atos Medical through reestablishment costs, short term loss of revenue, and long-term loss of business.

Outsourced IT operations to realize scale benefits. Technical and organization security measures (back-up, recovery, and re-instatement). IT suppliers audits. Regular penetration tests.

Financial Risks Mitigating actions / policies

Currency. Transaction exposure (purchases and sales in foreign currencies) and translation exposure (foreign subsidiary statements and balances translated to SEK).

Transaction: No hedging under Group policies. Translation: No hedging under Group policies. Group structure (central production, sales unit subsidiaries) limits translation exposure.

Interest Rate. Fair market value or future cash flow fluctuations, due to market interest rate changes may expose Atos Medical due to the debt financing (variable interest rate loans).

No hedging under group policies. Hedge accounting not applied.

Liquidity and Financing. Issues honoring financial debt obligations and problems that the group is unable to raise adequate financing at a reasonable cost.

Central liquidity planning and monitoring. Financing requirements regulated by a loan agreement with a bank syndicate, ensuring financing for acquisitions, etc.

Credit and Counterparty. Transaction counterparties may incur a loss by failing to meet contractual obligations, primarily attributable to accounts receivable.

Credit reports obtained for new sales as needed. A large proportion of public sector institution sales limits risk.


28

The GroupThe nature and focus of the business

Lary 1 AB carries on holding operations in the Lary 1 Group (also known as Atos Medical). Atos Medical develops, produces and sells medical technology products mainly in the areas of laryngectomy and tracheostomy.

In a total laryngectomy, the entire larynx is surgically removed and the airways are separat-ed from the mouth, nose and esophagus. Instead, the person breathes through a stoma in the throat. While it is life saving, the operation affects several important functions such as speech, breathing, swallowing and sense of smell. Usually, a person undergoes a total laryn-gectomy after laryngeal cancer or esophageal cancer, also called throat cancer, while other causes are increasing, such as papillomavirus (HPV). Tracheostomy is a surgical procedure where an opening in the trachea is made in the throat just below the larynx to facilitate breathing. In a tracheostomy, the larynx is not surgically removed.

Atos Medical’s products allow people to speak after a total laryngectomy even though they no longer have a larynx. They also allow people to breathe through their stoma during the day and night while their lung health recovers. To restore voice and lung health, Atos Medical offers different voice prostheses for speech and various heat and moisture exchangers for breathing.

Atos Medical is a market- leader in the areas of laryngectomy and tracheostomy. Sales are carried on through own subsidiaries or branches in 22 countries worldwide. The branches are located in Switzerland and Portugal.

Sales also take place via distributors in a large number of countries. For an overview of Atos Medical’s subsidiaries, see Note 14.

Ownership structure

Lary 1 AB is 96.7% owned by Financiere Lary S.a.r.l as of the end of 2020. The remaining 3.3% is owned by employees and officers of the Atos Medical Group. Financiere Lary S.a.r.l is owned by funds controlled by and/or advised by PAI Partners SAS.

Significant events during the financial year

No significant events occurred during the financial year. The impact of Covid- 19 has not been significant.

Directors’ ReportThe Board of Directors and the CEO of Lary 1 AB hereby present the financial statements and consolidated financial statements for the 01.01.2020- 31.12.2020 financial year.

Multi-year summary

(SEKm) 2020 2019 2018 2017

Net revenue 1,761 1,736 1,608 1,267

Operating profit/loss 340 295 186 145

Earnings after financial items 254 -248 -388 -199

Total assets 9,790 10,186 9,900 9,242

Equity ratio 34% 35% 37% 40%

Average number of employees 840 809 710 600

Sales increased by 1% and amounted to SEK 1,761m (1,736m). The overall growth was nega-tively impacted by the decision to discontinue certain products within the Ear, Nose, and Throat (ENT) area. Atos Medical’s core business area, Laryngectomy and Tracheostomy, showed 4% growth (organic growth of 7% in fixed currency). Overall, Covid-19 had a negative, but not significant impact on overall sales. Growth was lower in distributor markets and hospital sales in most markets were impacted, but the direct sale to users and increased use of digital channels were strong drivers of business continuity. Limited access to hospitals negatively affected the number of voice prothesis replacements. On the positive side, Covid-19 increased the need for additional protection, leading to high sales growth of HMEs with special protection.

Despite lower sales than expected, the Group’s operating profit increased to SEK 340m (295m), and the operating margin was 19% (17%). Sales, administration, and research/devel-opment costs decreased to 60% of net sales (63%). This was mainly due to tight cost control when Covid-19 hit, in particular, driven by less travel and lower marketing activities as well as fewer recruitment activities, which overall reduced the cost development and improved the operating profit.

The net financial costs amounted to SEK -85m (-543m). The Group’s net financial costs were positively impacted by SEK 312m (-144m) of currency effects due to the revaluation of liabilities in foreign currency (EUR, USD and GBP).


29

Multi-year summary

(SEK 000) 2020 2019 2018 2017

Net revenue 0 0 0 0

Operating profit/loss -101 -1,188 74 -455

Cash and cash equivalents 53,210 53,599 54,267 28,324

Interest-bearing liabilities 0 0 0 0

Investments 0 0 0 0

Proposed allocation of profitThe following funds (SEK) are available for distribution by the Annual General Meeting:

Share premium reserve 3,809,782,142

Retained earnings 0

Net income/loss 0

The Board of Directors and the CEO propose that the following sum be carried forward: 3,809,782,142

In regard to the Group’s and the company’s earnings and financial position in general, we refer to the following income statement and balance sheet, notes to the financial statements and disclosures.

The company expects continued strong development in operating profit. The company is currently in the launch phase of the new product range, Provox Life. Also, activities for improving and digitalizing the company’s interaction with customers and regarding infrastructure in terms of systems and processes, are ongoing.

Research and development

Atos Medical conducts active research and product development to further develop the product portfolio. Technologies and product improvements are patented. The costs for research and development amounted to SEK 17m (21m).

Investments and acquisitions

No company acquisitions were made during the year. The Group’s investments in intangible fixed assets amounted to SEK 50m (42m) and investments in tangible fixed assets amounted to SEK 44m (36m). In regard to intangible assets, the largest item is capitalized development expenditure for new products.

Liquidity, financing and financial position

Atos Medical has a loan agreement with a consortium of banks. This is described in more detail in Note 3. At year- end, consolidated cash and cash equivalents totaled SEK 648m (373m) and interest- bearing liabilities totaled SEK 5,432m (5,606m).

Cash flow from operating activities for the year improved and amounted to SEK 404m (356m), mainly due to the improved operating profit. The inventory level has increased due to slightly higher inventory in the subsidiaries to ensure product supply during the pandemic. Cash flow for the year from investment activities amounted to SEK -72m (-78m) and the cash flow from financing operations amounted to SEK -41m (-37m).

At year- end, the Group’s total assets amounted to SEK 9,790m (10,186m). The decrease is mainly due to effects of the currency translation.

Significant risks and uncertainties

The Group’s operations are exposed to various risks. These risks are both strategic, operational and financial. The risks are assessed as unchanged compared to the previous year. For a more detailed description of the company’s risks, see the section titled Risk management on pages 26-27 and Note 3.

Employees

Average number of employees during the year totaled 840 (809). The details per region can be seen in Note 10. The Group is actively developing its employees and in 2020 a Global leadership program for Atos Medical’s leaders were implemented. More informa-tion regarding employees can be found in section People and Culture on page 18-19.

Environment and Sustainability Report

Atos Medical’s Sustainability Report is available on the company’s website www.atosmedical.com. The company does not carry on any activity requiring official notification. The work concerning the environment is described in more detail in the company’s Sustainability Report.

Parent CompanyLary 1 AB has the purpose of directly or via subsidiaries to own and manage fixed and movable property and securities. The company shall also coordinate the activities of the company’s sub-sidiaries and/or other companies that are in group or other interest with the company and con-duct other related activities. Lary 1 AB is 96.7% owned by Financiere Lary S.a.r.l as of the end of 2020. The remaining 3.3% is owned by employees and officers of the Atos Medical Group. Fi-nanciere Lary S.a.r.l is owned by funds controlled by and/or advised by PAI Partners SAS.


30

Note 2020 2019

Net revenue 5 1,761,193 1,736,400

Cost of goods sold -342,072 -355,214

Gross profit 1,419,121 1,381,186

Sales expenses -797,301 -821,050

General and administrative expenses -246,587 -243,783

Research and development expenses -17,138 -20,616

Other operating income 2,051 2,427

Other operating expenses -20,265 -2,849

Operating profit(loss) 6,7,8,9,10 339,881 295,315

Financial income 11 312,331 –

Financial expenses 12 -397,819 -542,867

Earnings before taxes 254,393 -247,552

Income tax 13 -38,124 -83,427

NET EARNINGS(LOSS) FOR THE YEAR 216,269 -330,979

Attributable to:

Parent company’s stockholders 216,269 -330,979

Consolidated profit and loss statement

2020 2019

Net earnings(loss) for the year 216,269 -330,979

Other comprehensive income

Components that may be reallocated to the current year’s net earnings(loss):

Annual currency translation gain(loss) due to translation of foreign operations -411,665 193,003

Total of components that may be re-allocated to the current year’s net earnings(loss) -411,665 193,003

Total – Other comprehensive income for the year, net after taxes -411,665 193,003

COMPREHENSIVE INCOME FOR THE YEAR -195,396 -137,976

Attributable to:

Parent company’s stockholders -195,396 -137,976

Consolidated report on comprehensive income


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Note 12/31/2020 12/31/2019

ASSETS

Fixed assets

Intangible assets 15

Goodwill 5,143,857 5,436,873

Trademarks 1,362,674 1,445,160

Customer relationships 1,203,940 1,445,905

Technology 674,723 704,546

Other intangible assets 36,953 20,094

8,422,147 9,052,578

Property, plant, and equipment

Buildings and land 16 23,208 49,744

Machinery and other technical installations 16 37,621 37,170

Inventory and equipment 16 74,357 60,772

Right of use assets 9 106,341 105,040

Assets under construction 16 23,326 25,231

264,853 277,957

Long-term financial assets

Other financial assets 17 3,216 2,881

3,216 2,881

Deferred tax assets 13 42,820 50,241

Total Fixed assets 8,733,036 9,383,657

Current assets

Inventory 18 124,057 87,305

Receivables

Accounts receivable 19 242,719 280,225

Current tax assets 20,494 25,360

Other receivables 4,968 16,109

Prepaid expenses and accrued income 20 16,916 19,446

285,097 341,140

Cash and cash equivalents 647,975 373,479

Total current assets 1,057,129 801,924

TOTAL ASSETS 9,790,165 10,185,581

Consolidated report on the financial position

Note 12/31/2020 12/31/2019

EQUITY AND LIABILITIES

Equity 21

Shareholder’s equity 38,424 38,424

Other paid-in capital 3,809,782 3,809,782

Translation reserve 173,416 585,081

Retained earnings including net earnings(loss) for the year -696,965 -913,234

Equity attributable to the parent company’s shareholders 3,324,657 3,520,053

Total equity 3,324,657 3,520,053

Long-term debt

Liabilities to credit institutions 22 5,398,863 5,566,334

Deferred tax liabilities 13 775,125 847,007

6,173,988 6,413,341

Current liabilities

Liabilities to credit institutions 22 33,333 39,373

Accounts payable 49,887 46,660

Current tax liabilities 53,412 25,110

Other current liabilities 28,287 23,673

Accrued expenses and prepaid income 23 126,601 117,371

291,520 252,187

TOTAL EQUITY AND LIABILITIES 9,790,165 10,185,581


32

Share capital Other paid-in capital Translation reserve

Retained earnings Including net earnings(loss)

for the year

Total shareholder’s equity attributable to the parent

company’s stockholders

Shareholder’s equity on Jan. 1. 2019 38,424 3,809,782 392,078 -577,852 3,662,432

Other changes in Equity

Change in accounting principles IFRS16 – – – -4,403 -4,403

Net earnings(loss) for the year – – – -330,979 -330,979

Other comprehensive income for the year, net after taxes – – 193,003 – 193,003

Comprehensive income for the year – – 193,003 -330,979 -137,976

Ownership transactions:

Total shareholder transactions – – – – –

Shareholder’s equity on Dec. 31. 2019 38,424 3,809,782 585,081 -913,234 3,520,053

Shareholder’s equity on Jan. 1. 2020 38,424 3,809,782 585,081 -913,234 3,520,053

Other changes in Equity

Net earnings(loss) for the year – – – 216,269 216,269

Other comprehensive income for the year, net after taxes – – -411,665 – -411,665

Comprehensive income for the year – – -411,665 216,269 -195,396

Ownership transactions:


Shareholder’s equity on Dec. 31. 2020 38,424 3,809,782 173,416 -696,965 3,324,657

Consolidated statement of changes in equity


33

Note 2020 2019

Operating activities

Operating profit(loss) 339,881 295,315

Adjustment for items not included in cash flow:

Depreciation and write-downs 307,571 298,257

Unrealized exchange rate gains(losses) -31,150 11,744

Proceeds from the sale of fixed assets 6,959 1,032

Interest received – –

Interest paid -199,242 -209,173

Financial expenses paid -914 -983

Income tax paid -31,960 -24,234

Cash flow from operating activities before changes in working capital 391,145 371,958

Changes in working capital

Decrease(+)/increase(-) in inventory -49,799 13,092

Decrease(+)/increase(-) in accounts receivables 18,129 -3,123

Decrease(+)/increase(-) in other current receivables 6,433 -10,438

Decrease(-)/increase(+) in accounts payable 18,008 -18,010

Decrease(-)/increase(+) in other current liabilities 20,454 2,273

Cash flow from operating activities 404,370 355,752

Consolidated cash flow report

Note 2020 2019

Investment activities

Acquisition of subsidiaries 25 – –

Acquisition of and investment in intangible assets 15 -49,884 -41,901

Sales of intangible assets 852 7

Acquisition of property, plant, and equipment 16 -43,867 -36,382

Sales of property, plant, and equipment 21,246 844

Investments in other long-term financial assets -698 -881

Cash flow from investment activities -72,351 -78,313

Financing activities 26

Repayments of debt -40,944 -37,334

Cash flow from financing activities -40,944 -37,334

Net increase(decrease) in cash flow 291,075 240,105

Cash and cash equivalents at beginning of year 373,479 127,763

Exchange rate changes on cash and cash equivalents -16,579 5,611

Cash and cash equivalents at end of year 647,975 373,479


34

Consolidated notes

Note 1 General informationLary 1 AB, EIN (“organisationsnummer”) 559064- 1527, is a stock corporation registered in Sweden with a registered office in Malmö. The address of the main office is Box 31053, 20049, Malmö, Sweden. The corporation and its subsidiary’s (“the group’s” or “Atos Medical’s”) business involves the development, manufacturing, sale, and distribution of medical devices, primarily relating to laryngectomy procedures. The composition of the group is described in Note 14.

Lary 1 AB, the parent company of the Atos Medical Group, is a stock corporation that was 96.7% owned by Financiere Lary S.a.r.l as of the end of 2020. The remaining 3.3% is owned by employees and officers of the Atos Medical Group. PAI Partners supports Financiere Lary S.a.r.l via the PAI Europe – VI fund. The company has the purpose of directly or via subsidiaries to own and manage fixed and movable property and securities. The company shall also coordinate the activities of the company’s subsidiaries and/or other companies that are in group or other interest with the company and conduct other related activities.

The annual report and consolidated financial statements were approved for release by the board on April 21, 2021. The consolidated profit and loss statement, comprehensive income report, and report on the financial position as well as the parent company’s P&L statement and balance sheet will be subject to approval at the general assembly on April 21, 2021.

Note 2 Significant accounting principlesThe consolidated financial statements for Lary 1 have been prepared in accordance with EU- approved International Financial Reporting Standards (IFRS). Pursuant to the rules of ex-emption for non- listed companies, Lary 1 has chosen not to apply IAS 33 Earnings Per Share and IFRS 8 Operating Segments. Additionally, the group is applying the Annual Accounts Act (“Årsredovisningslagen”) and the Swedish Financial Reporting Board’s recommendation RFR 1, Supplementary Accounting Rules for Groups.

The financial reports are presented in Swedish kronor, the parent company’s functional currency and the reporting currency of both the parent company and the group. All amounts, unless otherwise indicated, are rounded to the nearest thousand.

New, amended standards and improvements that came into force in 2020 have not had any significant effect on the group’s financial reports for the fiscal year.

Fixed assets and long- term debt essentially consist of amounts expected to be recovered or paid more than twelve months after the balance sheet date. Current assets and current liabilities essentially consist of amounts expected to be recovered or paid within 12 months of the balance sheet date.

In the consolidated financial statements, items are valued at their acquisition cost, aside from certain financial instruments that are valued at their fair market value through profit or loss. The essential accounting principles applied are described below.

New, amended standards and interpretations that have not yet entered into effect

The new, amended standards and interpretations that have been issued, but which enter into force for fiscal years beginning after January 1, 2020, have not yet been adopted by the group. Management estimates that the new, amended standards that have yet to enter into force will not have any significant effect on the group’s financial reports once they are applied for the first time.

Consolidated financial statements

Subsidiaries are companies that are under the controlling interest of Lary 1 AB. A controlling interest exists if Lary 1 AB has an influence on the investment object, is exposed to or entitled to a variable rate of return from its engagement, and can apply its influence over the invest-ment to affect this return. In the assessment of whether a controlling interest exists, the ex-istence of any voting shares or de facto control is considered.

Subsidiaries are included in the consolidated financial statements from the date of their acquisition up to the date when the parent company no longer has a controlling interest in the subsidiary. The accounting principles for subsidiaries have been adjusted as needed in order to agree with the group’s accounting principles. All intra- group transactions, balances, and unrealized profits and losses attributable to intra- group transactions have been elimi-nated from the consolidated financial statements.

Business combinations

Mergers and acquisitions are reported pursuant to the acquisition method.

The purchase price for the acquired business is valued at the fair market value at the time of acquisition, which is calculated as the sum of the fair market values at the time of acquisition


35

of all acquired assets, accrued or assumed liabilities, as well as shares of equity issued in exchange for control of the acquired business. Acquisition- related expenses are reported in the profit and loss statement when they occur.

The purchase price also includes the fair market value at the time of acquisition of any assets or liabilities resulting from an agreement with a conditional purchase price. Changes in the fair market value of a conditional purchase price acquisition arising due to additional information about facts and conditions that were in existence at the time of the acquisition and were received after the acquisition date qualify as adjustments during the appraisal period and are retroactively adjusted with a corresponding adjustment of goodwill. Condi-tional purchase price acquisitions that are classified as equity are not revalued and the sub-sequent adjustment is recognized in equity. Any other changes to the fair market value due to a conditional additional purchase amount are reported in the profit and loss statement.

In the case of business acquisitions where the sum of the purchase price, any non- controlling interest, and the fair market value of prior share holdings on the acquisition date exceeds the fair market value of identifiable acquired net assets at the time of acquisition, the differ-ence is reported as goodwill in the “Report on the financial position”. If the difference is negative, this is reported as a “gain from a low- cost acquisition” directly in the profit and loss statement after verification of the difference.

For each business acquisition, existing non- controlling share holdings in the acquired company are valued at either fair market value or the value of the proportionate share of those non- controlling holdings in the acquired company’s identifiable net assets.

Goodwill

Goodwill appearing in an acquisition consists of the difference between the transferred com-pensation and the group’s share of the fair market value of an acquired subsidiary’s identifi-able assets and liabilities on the date of the acquisition. At the time of acquisition, goodwill is reported at acquisition cost, but after the first reporting date, it is valued at acquisition cost less any accumulated impairment charges. When assessing the need for impairment, goodwill is allocated to the cash- generating units that are expected to benefit from the acquisition. A cash- generating unit to which goodwill has been allocated is tested annually for impairment or more frequently if there is an indication that the cash- generating unit needs to be impaired. If the recoverable amount for a cash- generating unit is lower than its carrying amount, the impairment loss is first allocated to the carrying amount of goodwill

allocated to the cash- generating unit and subsequently to other assets, based on the carrying amount of the respective asset relating to the cash- generating unit. Any impairment of good-will is immediately reported as an expense and is not reversed.

When selling a cash- generating unit, any goodwill allocated to the cash- generating unit is included in the calculation of capital gain or loss on the sale.

Revenue

Revenues are recognized in order to depict a transfer of the promised goods with an amount that reflects the payment to which the company is expected to be entitled in exchange for the goods. The identification of the revenue is based on the customer contracts and the performance obligations defined in the contracts. Revenue must be recognized when the performance obli-gation has been met and control of the goods has been transferred to the customer.

The group’s performance obligation consists of the sale of medical technology products that are largely produced at the facilities in Hörby (Sweden). Atos Medical fulfills its performance obligation when the goods have been delivered to the customer and it is also then that the revenue is recognized. The group sells both directly to patients and to hospitals and distributors. When the goods have been delivered to the customer, Atos Medical has no outstanding per-formance obligations and the revenues are recognized at a specific time. The transaction price falls due for payment within 30-60 days depending on the type of customer concerned. In many cases, it is a state or private insurance institution that is liable for payment when it comes to goods that give patients the right to reimbursement from them.

As the group produces and supplies medical technology products, there are a number of quality requirements and quality controls that must be implemented before the products can be sold and delivered to patients. This means that the group has very few returns and defective products and, based on the history, no provisions are made for returns. The group also provides no guarantees for the products as each product is quality assured before delivery, which ensures quality and intended use.

Dividend and interest incomeDividend income is recognized once the owner’s right to receive payment has been established.

Interest income is recognized evenly over its effective term via application of the effective interest method.


36

Leasing contracts

The group assesses whether a contract is, or contains, a lease agreement at the beginning of the contract. The group recognizes a right of use asset and a corresponding lease liability for all leases in which the group is lessee, except for short- term leases (leases with a leasing period of a maximum of 12 months) and for leases where the underlying asset is of low value. For leasing contracts that meet the criteria for the relief rules, the group recognizes leasing fees as a straight- line operating cost over the lease period, unless another systematic method of accruing the lease fee gives a more accurate picture of how the economic bene-fits from the underlying asset are consumed by the lessee.

The leasing liability is initially valued at the present value of future lease payments that have not been paid at the start date of the lease, discounted with the implicit interest rate, or if it cannot be easily determined, the incremental loan interest rate. The incremental loan interest rate is the interest rate that a lessee would have to pay for financing through loans during a corresponding period, and with similar collateral, for the right of use of an asset in a similar economic environment.

Leasing fees included in the valuation of lease liabilities include the following;

• fixed fees (including fixed fees for its substance), after deduction of any benefits in connection with the signing of the lease to be obtained;

• variable leasing fees that depend on an index or price initially valued using the index or price at the commencement date;

• amounts expected to be paid by the lessee under residual value guarantees;

• the exercise price for an option to buy if the lessee is reasonably sure to take advantage of such an opportunity; and

• penalty fees that are payable upon termination of the lease, if the lease period reflects that the lessee will take advantage of an opportunity to terminate the lease.

Leasing liabilities are presented as part of liabilities to credit institutions in the report on financial position. Leasing liabilities are recognized in the subsequent period by increasing the debt to reflect the effect of interest and being reduced to reflect the effect of leasing fees paid. Leasing liabilities are revalued with a corresponding adjustment of the right of use asset according to the rules found in the standard. No such adjustments have been made during the current period.

The right of use assets are initially recognized at the value of the lease liability, with the addition of leasing fees paid on or before the start date of the lease and initial direct expenses. The right to use asset is recognized in the subsequent period at cost less depreciation and write- downs.

If the group incurs obligations for dismantling of a leased asset, restoration of land or restoration and renovation of access to condition agreed in a contract, a provision for such obligations is

recognized in accordance with IAS 37. Such provisions are included in the acquisition value of the rights of use asset, unless they are linked to the production of inventories.

The right of use assets are depreciated over the estimated useful life or, if shorter, over the agreed lease term. If a lease transfers ownership at the end of the lease term or if the acquisition value includes a probable exercise of a call option, the rights of use assets are depreciated over the useful life. Depreciation begins on the start date of the lease.

The right of use assets are presented on a separate line in the report on financial position. The group applies the principles in IAS 36 for impairment of right of use assets and reports this in the same way as described in the principles for tangible fixed assets recognized in accordance with IAS 16. Variable leasing fees that do not depend on an index or price are not included in the valu-ation of leasing liabilities and rights of use assets. Such leasing fees are reported as an expense in operating profit in the period in which they arise.

IFRS 16 contains a practical relief rule which means that the lessee does not have to separate service components from the leasing fee applicable per asset class. The group has applied this relief rule for the following asset classes;

– Real estate / office space

– Vehicles

– IT equipment / Other

Foreign currency

Items contained in the financial reports of various group business units are reported in the currency used in the main economic environment in which each respective unit primarily conducts its business (functional currency). In the consolidated financial statements, all amounts are converted to Swedish kronor (SEK), which is the parent company’s functional and reporting currency.

Foreign currency transactions for the various business units are converted into the respective unit’s functional currency according to the exchange rates in effect on the date of the trans-action. On each balance sheet date, foreign currency monetary items are converted at the exchange rate in effect on that date. Non- monetary items valued at fair market value in a foreign currency are converted at the exchange rate in effect at the time a fair market value was determined. Non- monetary items valued at their historical cost in a foreign currency are not recalculated.

Exchange rate differences are recognized during the period in which they appear in the profit and loss statement, except for hedging transactions that satisfy the conditions for hedge accounting of cash flow or net investments, where profits and losses are reported in “Other comprehensive income”.


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In the consolidated financial statement, the assets and liabilities of foreign subsidiaries are converted into Swedish kronor using the exchange rate in effect on the balance sheet date. Income and expense items are converted at the average exchange rate during the period unless the rate has fluctuated significantly during the period, in which case, the exchange rate on the transaction date is used. Any translation differences that arise are reported in “Other comprehensive income” and transferred to the group’s translation reserve. Upon divestment of a foreign subsidiary, such translation differences are reported in the profit and loss statement as part of the capital gain/loss.

Goodwill and adjustments to fair market value from the acquisition of a foreign company are treated as the acquired company’s assets and liabilities and are converted at the ex-change rate in effect on the balance sheet date.

Borrowing costs

Borrowing costs directly attributable to the purchase, construction, or production of an asset that requires a considerable amount of time to complete for its intended use or sale are in-corporated in the asset’s acquisition cost until the date the asset is completed for its intended use or sale. Interest income from temporary placement of any borrowed funds for the afore-mentioned assets is deducted from the borrowing costs included in the asset’s acquisition cost. Other borrowing costs are reported in the profit and loss statement for the period in which they were incurred.

Employee compensation

Com pen sa tion to em ploy ees in the form of wages, bonus es, paid va ca tions, paid sick leave, etc. as well as re tire ment ben e fits is rec og nized as it is in curred or when tar gets are met. Re tire ment ben e fits and other post- employment com pen sa tion are clas si fied as defined- contribution or defined- benefit re tire ment plans. The ITP plan of fered through Alec ta is a defined- benefit re-tire ment plan. How ev er, pur suant to UFR 10, the plan is re port ed as if it were a defined- contri-bution plan. For more in for ma tion, see Note 10.

Defined-contribution plansThe group pays set fees to a separate independent legal entity for defined- contribution plans and is not obliged to pay any additional fees. These costs are recognized as the benefits are earned, which normally coincides with the dates when the premiums are paid.

Taxes

The tax expense consists of the sum of current and deferred taxes.

Current taxesCurrent tax is paid or received for the current year, with application of the tax rates that have been decided or in practice decided on the balance sheet date. Current tax also in-

cludes any adjustment of current tax attributable to previous periods. Taxable income differs from the reported profit or loss in the income statement as it has been adjusted for non- taxable income and non- deductible expenses as well as income and expenses that were taxable or deductible in other periods.

Deferred taxesDeferred tax is reported on temporary differences between the carrying amount of assets and liabilities in the financial statements and the taxable value used for calculating taxable profit. Deferred taxes are reported in accordance with the “balance sheet method”. In prin-ciple, deferred tax liabilities are recognized for any taxable temporary differences, while deferred tax assets are recognized for any deductible temporary differences where it is likely that the amounts can be applied against future taxable surpluses. Deferred tax liabil-ities and deferred tax assets are not recognized if the temporary difference is attributable to goodwill or is incurred as a result of a transaction constituting the initial recognition of an asset or liability (that is not a business combination) and does not affect the reported or taxable income at the time of the transaction.

Deferred tax liabilities are reported as taxable temporary differences attributable to in-vestment in subsidiaries, except in cases where the group can control the timing of the re-versal of the temporary differences and it is unlikely that such a reversal will occur in the foreseeable future. With regard to such investments, deferred tax assets attributable to deductible temporary differences will only be recognized to the extent it is likely that these amounts may be applied against future taxable surpluses and that this is not likely to hap-pen in the foreseeable future.

The carrying amount of deferred tax assets is assessed on each reporting date and re-duced insofar it becomes unlikely that sufficient taxable surpluses will be available to be offset, in whole or in part, by the deferred tax asset.

Deferred taxes are calculated using the expected tax rates for the period in which the as-sets were recovered or liabilities adjusted based on the prevailing or announced tax rates (and tax laws) in effect on the balance sheet date.

Deferred tax assets and tax liabilities are offset since they relate to income tax debited by the same authority and since the group intends to adjust the tax with a net amount.

Current and deferred taxes for the periodCurrent and deferred taxes are reported as an expense or income item in the profit and loss statement, except where the taxes are attributable to transactions reported in “Other com-prehensive income” or directly posted to “Shareholder’s equity”. In such cases, the taxes are also reported in “Other comprehensive income” or directly posted to “Shareholder’s equity”. For current and deferred taxes originating from the recognition of business combinations, the tax effect is included in the acquisition estimate.


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Property, plant, and equipment (PP&E)

Property, plant, and equipment is reported at its acquisition cost less any accumulated depreciation and/or impairment charges.

The acquisition cost consists of the purchase price, expenses directly attributable to deliv-ering and/or installing the asset and equipping it for use, as well as estimated expenses for disassembly and removal of the asset and restoration of the installation site to its original state. Additional expenses are either included in the asset value or reported as a separate asset when it is likely that future economic benefits attributable to the item will inure to the benefit of the group and that the acquisition cost for such expenses can be reliably calculated. All other expenses for repairs and maintenance as well as incremental expenses are reported in the profit and loss statement for the period in which they were incurred.

Where the difference in the wear and tear of a PP&E asset’s significant components is considered to be substantial, the asset is divided into its components.

Depreciation of PP&E is reported such that the asset’s acquisition cost, reduced by the calculated residual value at the end of its useful lifespan, is amortized on a straight line basis over its estimated useful life. Depreciation begins when the PP&E asset can be put into use. The useful lifespans of property, plant, and equipment are estimated at:

Buildings 25 years

Machinery and other technical installations 3-8 years

Inventory and equipment 3-8 years

Land is not depreciated.

Estimated useful lifespans, residual values, and depreciation methods are reviewed at least at the end of each accounting period; the effect of any changes in estimates is reported in future periods.

The carrying amount of a PP&E asset is deducted from the balance sheet in the event of any decommissioning or disposal or if no future economic benefits are expected from the decommissioning/disposal of the asset. The profit or loss obtained from decommissioning or disposing of the asset, amounting to the difference between any net income obtained from the disposal and the carrying amount of the asset, is recognized in the profit and loss statement during the period in which the asset is removed from the balance sheet.

Intangible assets

Acquisition via separate purchasesIntangible assets with defined useful lifespans that have been acquired separately are reported at their acquisition cost less any deductions for accumulated depreciation and/or impairment

charges. Depreciation is recognized on a straight- line basis over the asset’s estimated useful lifespan. Estimated useful lifespans and depreciation methods are reviewed at least at the end of each fiscal year; the effect of any changes in estimates is reported in future periods.

Acquisition as a part of a business combinationIntangible assets that have been acquired through a business combination are identified and reported separately from goodwill where they meet the definition of an intangible asset and their fair market value can be reliably calculated. The acquisition cost of such intangible assets is their fair market value at the time of the business combination.

Like separately purchased intangible assets, after the initial reporting date, intangible assets acquired through a business combination are reported at their acquisition cost less any deductions for accumulated depreciation and/or impairment charges.

TrademarksThe group’s trademarks were acquired through mergers and acquisitions and have been valued at their fair market value at the time of each business combination. After the initial reporting date, the trademarks are reported at their acquisition cost less any deductions for accumulated impairment charges. The group’s trademarks are considered to have an indef-inite useful lifespan and are subject to review for impairment whenever there is an indication of impairment, or at least on an annual basis.

The acquired trademarks in the group derive from the acquisition of the Atos Medical group in 2016. The assessment that the useful life of these trademarks are indefinite is based on the following circumstances. These are well- established trademarks within their respective areas, which the group intends to maintain and further develop. The trademarks are considered to be of significant economic significance as they form an integral part of the product offering to the market, by signaling quality and innovation in the products. The trademarks are considered to affect the pricing and competitiveness regarding the products. Due to their connection with the ongoing operations, these are considered to have an indefinite useful life and are expected to be used as long as relevant activities are in progress.

Taking into account the assessment that the cash flows attributable to the trademarks can not be distinguished from other cash flows within the respective cash- generating unit, impairment test for both goodwill and trademarks are jointly carried out by calculating the recoverable amount of the cash- generating units where the goodwill and the trademarks are allocated.

Customer relationshipsCustomer relationships are reported at their acquisition cost less any accumulated depreciation and/or impairment charges. Depreciation is recognized on a straight- line basis over the esti-mated useful life of the customer relationship, which has been set at 10-12 years. The estimated useful life is based on the remaining lifespan of the patients using the group’s products, which is an average of 8-9 years after they start using the products. However, the relationships are considered to have a longer useful life than this since the collaboration with hospitals and other customers is considerably longer.


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TechnologyThe group’s technology consists of intellectual property rights, including patents and know- how related to specific product groups. Patents and similar rights acquired via business combinations are reported at their fair market value at the time of the merger or acquisition. Technology is reported at its acquisition cost less any accumulated depreciation and/or impairment charges. Depreciation is recognized on a straight- line basis over the estimated useful life of the technology, which has been set at 13-25 years. The estimated useful life is based on the lifespan of patents as well as the calculated useful life of the products.

Internally- generated intangible assets derived from the group’s product development (development of new products and production processes) are only reported if the following conditions have been met:

• It is technically feasible to completely produce the intangible asset and use or sell it.

• The group intends to produce the intangible asset and use or sell it.

• The conditions are in place to use or sell the intangible asset.

• The intangible asset is likely to be able to generate future economic benefits.

• There are adequate technical, financial, and other resources to completely develop the intangible asset and use or sell it, and

• The expenses attributable to the intangible asset during its development can be reliably calculated.

If it is not possible to report an internally- generated intangible asset, the development costs are reported as an expense during the period in which they are incurred.

After the initial reporting date, internally- generated intangible assets are reported at acquisition cost less any deductions for accumulated depreciation and/or impairment charges. The estimated useful lifespan is 3-5 years. Estimated useful lifespans and depre-ciation methods are reviewed at least at the end of each fiscal year; the effect of any changes in estimates is reported in future periods. Yearly, the value of the internally- gen-erated intangible assets under development are tested for impairment, and thereafter if there is an indication that the assets needs to be impaired.

Other intangible assetsOther intangible assets mainly consist of capitalization of the development costs of the group’s business systems. These assets are valued at their acquisition cost less any deductions for ac-cumulated depreciation and/or impairment. Depreciation is recognized on a straight- line basis over the asset’s estimated useful lifespan, which is normally 5 years.

Impairment of property, plant, and equipment and intangible assets, excluding goodwill

On each balance sheet date, the group analyzes the carrying amounts for tangible and intangible assets in order to assess whether these assets have become impaired. If this is

the case, the asset’s recoverable amount is calculated in order to determine the amount of any impairment charge. Where it is not possible to calculate a recoverable amount for a particular asset, the group calculates the recoverable amount for the cash- generating unit the asset belongs to.

Intangible assets with undefined useful lifespans and intangible assets that are not yet ready for use must be reviewed either on an annual basis or whenever there is an indication of impairment to see if impairment is required.

The recoverable amount is the larger of the fair market value less sales costs or its useful value. In calculating the useful value, the future estimated cash flow is discounted to its net present value using a discount rate before taxes that reflects current market perceptions of the time value of money as well as the risks associated with the asset.

If the recoverable amount for an asset (or cash- generating unit) is calculated at a lower value than the carrying amount, the carrying amount of the asset (or cash- generating unit) is written down to the recoverable amount. An impairment charge must be immediately recognized in the profit and loss statement.

Where an impairment charge is later reversed, the asset’s (or cash- generating unit’s) carrying amount is increased to the reassessed estimated recovery value (ERV), but the increased carrying amount may not exceed the carrying amount that would have been calculated if no impairment charges had been applied to the asset (or cash- generating unit) in prior years. A reversal of an impairment charge is reported directly in the profit and loss statement.

Financial instruments

A financial asset or liability is recognized on the balance sheet when the group becomes subject to the instrument’s contractual terms. A financial asset is removed from the balance sheet when all benefits and risks associated with the ownership rights have been transferred. A financial liability is removed from the balance sheet when the obligation in the contract is fulfilled or otherwise terminated.

On each balance sheet date, the group assesses whether there are any objective indications that a financial asset or group of financial assets is in need of impairment due to events that have occurred. Examples of such events include a materially impaired financial condition of the counterparty or non- payment of overdue amounts.

Financial instruments are initially measured at fair value and thereafter on an ongoing basis at fair value or amortized cost, depending on the classification. All financial derivative instruments are recognized on an ongoing basis at fair value. Purchases and sales of financial assets are recognized on the trade date, which is the date on which the group commits to buy or sell the asset. The group applies the policy of reporting reserves for expected credit losses for financial assets and receivables classified at amortized cost.


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Classification of financial instrumentsDebt instruments: the classification of financial assets that are debt instruments is based on the group’s business model for managing the asset and the nature of the asset’s contractual cash flows:

The instruments are classified at:

• amortized cost

• fair value via other comprehensive income, or

• fair value via the income statement

Financial assets classified at amortized cost are initially measured at fair value plus transaction costs. Accounts receivable are recognized initially at invoiced value. After initial recognition, the assets are valued according to the effective interest method. Assets classified at amortized cost are held according to the business model to collect contractual cash flows that are only payments of principal amounts and interest on the outstanding capital amount. The assets are covered by a loss provision for expected credit losses.

The group does not have any assets classified at fair value via other comprehensive income.

Fair value via the income statement is all other debt instruments that are not valued at amor-tized cost or fair value via other comprehensive income. Financial instruments in this category are initially recognized at fair value. Changes in fair value are recognized in the income state-ment. The group’s debt instruments are classified at amortized cost, except for debt instruments held for trading. No debt instruments were recognized at fair value during the year.

Equity instruments: classified at fair value via the income statement.

Derivatives: Derivative instruments are recognized in the balance sheet as per the contract date and are valued at fair value, both initially and in subsequent revaluations. Derivatives not identified as hedging instruments are classified in the balance sheet as financial assets and liabilities valued at fair value via the income statement. Gains and losses as a result of changes in fair value are recognized in the income statement’s financial items in the period in which they occur.

Currently, the group does not have any derivative instruments that are hedged.

Provision for expected credit lossesThe group’s financial assets and receivables, except for those classified at fair value via the income statement, are subject to impairment for expected credit losses. Impairment for credit losses in accordance with IFRS9 are forward- looking and a loss provision is made when there is any exposure to credit risk, usually on initial recognition. Expected credit losses reflect the present value of all cash flow deficits relating to any payment suspension.

Impairment requirements are taken into account for different maturities depending on the asset class and on any increased credit loss risk since the date of initial recognition. Expected credit losses reflect an objective, probability- weighted outcome that takes into account most scenarios based on reasonable and verifiable forecasts.

The simplified model is applied to accounts receivable. A loss provision is recognized, in the simplified model, for the expected residual maturity of the receivable or asset. See also Note 19.

The financial assets are recognized in the balance sheet at amortized cost, i.e. net of gross value and loss provision. Changes in the loss provision are recognized in the income statement in EBIT for accounts receivable and as a financial expense or income for other provisions. The group’s credit exposure is shown in Note 3 and in Note 19.

Definition of credit lossesThe group considers that the following are indication for credit losses because historical experience indicates that financial assets that meet any of the following criteria are generally not recoverable;

• when there is a breach of financial terms by the debtor; or

• information generated internally or obtained from external sources indicates that the debtor is unlikely to pay his creditors, including the group, in full (without taking into account collateral held by the group).

Regardless of the above analysis, the group considers that credit loss has occurred when a financial asset is more than 90 days past due unless the group has reasonable and verifiable information to show that another criterion is more appropriate.

Calculation of fair valueThe fair value of listed financial instruments is based on current market values on the balance sheet date. For unlisted financial instruments, or if the market for a specific asset is not active, the value is determined by applying adopted valuation techniques, whereby the group makes assumptions based on the market conditions prevailing at the balance sheet date. Market interest rates form the basis for the calculation of the fair value of long- term loans. For other financial instruments whose market value is not specified, fair value is deemed consistent with the carrying value.

Receivables and liabilities in foreign currenciesReceivables and liabilities in foreign currencies have been translated at the closing rate on the balance sheet date. Exchange rate differences on operating receivables and operating liabili-ties are included in EBIT, while exchange differences on financial receivables and liabilities are reported in financial items.


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Offsetting of financial instrumentsFinancial assets and liabilities are offset and the net amount is recognized in the balance sheet only when there is a legally enforceable right to offset the recognized amounts and an intention to settle on a net basis, or at the same time to realize the asset and settle the liability. The legal right may not be dependent on future events and it must be legally binding on the company and the counterparty both in the normal business operations and in the event of any suspension of payments, insolvency or bankruptcy. In order to limit credit risks in receivables from banks relating to derivative instruments, the group has entered into netting agreements, under ISDA agreements, with most of its counterparties.

Inventory

Inventory is valued at the lower of the weighted average cost and the net realizable value. The net realizable value is the estimated sales price after deductions for estimated com-pletion costs and any estimated sales- related costs.

Provisions

Provisions are reported when the group has an existing obligation (legal or informal) as a result of an event that has occurred, where it is likely that an outflow of resources is required to settle the obligation and the amount can be reliably estimated.

The allocated amount is the best estimate of the amount required to settle the existing obligation by the balance sheet date, taking into account any risks or uncertainties associ-ated with the obligation. When a provision is calculated by estimating the payments needed to settle the obligation, the amount reported must equal the current value of these payments.

Where part or all of an amount required to settle a provision is expected to be reimbursed by a third party, the reimbursement must be reported separately as an asset in the “Report on the financial position” whenever it is virtually certain it will be received if the company settles the obligation and the amount can be reliably calculated.

Cash flow

The group’s report on cash flow shows the changes in the company’s cash and cash equiva-lents during the fiscal year and has been prepared in accordance with the indirect method. The reported cash flow only includes transactions that resulted in proceeds or payments.

Important determinations and assumptions for accounting purposes

The preparation of financial reports requires the company’s management to make qualified assessments and estimates that affect assets and liabilities as well as income and expenses

reported during the period, along with other information provided in the financial state-ments. These estimates are based partly on past experience and partly on expectations of future events and are reviewed periodically. If other assumptions are made or other con-ditions emerge, the actual outcome could differ from these estimates and assessments.

Where applicable, assessments and assumptions that could have a significant impact on the group’s results and financial position have been listed in the respective notes. Estimates and assessments that could have a meaningful impact on the group’s results and financial position include the valuation of identifiable assets and liabilities from acquisitions (Note 25), goodwill (Note 15), and intangible assets with indefinite useful lives (Note 15) as well as deferred taxes (Note 13).

Note 3 Financial risk management and financial instrumentsThrough its operations, the Atos Medical Group is exposed to various types of financial risks, such as market, liquidity, and credit risks. The market risks primarily consist of interest rate and currency risks. The corporation’s Board of Directors is ultimately responsible for the risk exposure, risk management, and monitoring of the group’s financial risks, but this responsibility is primarily carried out by the Audit Committee. The framework that applies for risk exposure, risk management, and monitoring of the financial risks is implemented by the board. The board has delegated responsibility for everyday risk management to the company’s CFO, who monitors compliance with applicable frameworks, rules, and the financial policy itself, through the company’s finance function.

Market risks

Currency risksCurrency risk refers to the risk that either the fair market value or future cash flow fluctuates as a result of changes in exchange rates. Through its activities, Atos Medical is exposed to various types of currency risks. The group’s exposure to currency risk stems from the group’s purchases and sales denominated in foreign currencies, so- called transaction exposure. These currency risks consist partly of risk from fluctuations in the value of financial instru-ments, accounts receivable as well as accounts payable and partly of the currency risk in cash transactions. Currency risks also appear as a result of the translation of the income statements and balance sheets of foreign subsidiaries into the group’s functional currency, the Swedish krona. These risks are referred to as translation exposure. The group is also exposed to currency risks with regard to the cash flow from loans and investments denomi-nated in foreign currency, so- called financial exposure.

Transaction exposureTransaction exposure involves the risk that net income is affected by fluctuations in the exchange rates of cash flow denominated in foreign currencies. The group’s incoming cash


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The table below shows the translation exposure for net investments in foreign currencies (the amounts are in SEK translated at the closing rate of December 31).

Currency 12/31/2020 12/31/2019

EUR 3,619,296 3,807,404

GBP 1,088,908 1,207,805

USD 1,197,061 1,364,924

The group’s financial exposure mainly consists of foreign- currency denominated loans, where the distribution of loan structures is essentially adapted to the currency denomina-tions of the sales. Interest payments are made on a monthly basis for foreign currency loans, which reduces the net exposure linked to the foreign currency transaction exposure. These amounts are included in the table above, which shows total net monetary assets and liabilities. Hedge accounting has not been used.

Under “Market risks sensitivity analysis” below, the effects of exchange rate changes relative to the Swedish krona is presented for the most significant foreign currencies.

Interest rate risksInterest rate risk refers to the risk that either the fair market value or future cash flow fluctuates as a result of changes in prevailing market interest rates. The group is primarily exposed to interest rate risk through its debt financing. Since the loans have variable base interest rates, the group’s future financial expenses are affected by fluctuations in the prevailing market rates. As of the balance sheet date, the corporation’s interest- bearing debt amounted to SEK 5,432,196k (5,605,707k) at an average interest rate of 6.36% (6.63%). In order to reducing the interest rate risk, the group held interest swap agreements, where variable interest rates were swapped out with fixed interest rates. Hedge accounting has not been applied for these derivative instruments. The coupon payments has been recognized in the net interest income/expense and the change in fair market value has been accounted for in the income statement. Given the current interest rate situation, the interest rate risk is considered to be relatively low, with the Group choosing not to enter into any new interest swap agreements. The Group continuously monitors developments in the interest market and assesses the need accordingly.

Under “Market risks sensitivity analysis” below, the effects of market interest rate changes is presented.

flow is mainly in EUR, GBP, and USD, while its outgoing cash flow includes mainly these currencies as well as SEK, since the group has centralized manufacturing mainly in Sweden and the subsidiaries are supplied with products for sale in the local currency by this unit. The manufacturing unit mainly accrues costs in SEK. In all other respects, subsidiaries’ costs and sales are substantially in the same currency. The group pays interest on the loans on a monthly basis and the payments are made in the main currencies EUR, GBP and USD. Pursuant to the group’s policy, this transaction exposure has not been hedged via the use of currency derivatives. The group is therefore affected by fluctuations in these exchange rates since the manufacturing structure results in a net transaction exposure. Transaction exposure within the group is managed via a multi- currency cash pool linked to a credit line in SEK. Within the group, an internal monthly payment schedule for subsidiaries is employed to ensure that foreign cash flow is monitored. The group then carries out purchase or sales transactions in applicable currencies on an ongoing basis to ensure that the monthly cash pool is in net SEK.

The table below shows the nominal net amounts of the significant cash flows that make up the transaction exposure. This exposure is indicated based on the group’s cash flow for the most significant currencies. The amounts are in SEK translated at the closing rate of December 31.

Currency 2020 2019

EUR 334,160 283,049

GBP 105,023 113,074

USD 30,057 27,671

On the balance sheet date, the net book value of the group’s total monetary assets (+) and liabilities (-) used in the translation to SEK amounted to (the amounts are in SEK translated to the closing rate of December 31):

Currency 12/31/2020 12/31/2019

EUR -3,060,825 -3,300,829

GBP -775,529 -896,449

USD -845,752 -929,840

Translation exposureTranslation exposure involves the risk that the value of the group’s foreign currency- denominated net investments are negatively affected by exchange rate fluctuations. The group consolidates its net assets in SEK on the balance sheet date. This risk is referred to as the translation expo-sure and, pursuant to the group’s policy, so- called hedging of net investments is not employed.


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Market risks sensitivity analysisThe sensitivity analysis for currency risk shows the group’s sensitivity to an increase or de-crease of 10% in the Swedish krona relative to the most significant currencies. The transaction exposure shows how the group’s net profit/loss after income taxes would be affected by a change in the exchange rate. This also includes outstanding foreign currency- denominated accounts receivable and accounts payable on the balance sheet date. The translation expo-sure shows how the group’s net profit/loss after income taxes and shareholder’s equity would be affected by a change in the exchange rate.

The sensitivity analysis for interest rate risk shows the group’s sensitivity to an increase or decrease of 100 points in the applicable prevailing market rates. The interest rate sensitivity is based on the effect a change in the prevailing market interest rate would have on net profit/loss after income taxes, both with respect to interest income and expense as well as unrealized changes in the fair market value of derivatives. The sensitivity analysis is based on an interest rate scenario that the company’s management feels is a reasonable assumption for the next 12 months, where all other factors, e.g. exchange rates, remain unchanged.

SEKm

2020 Effect on net

profit/loss

2020 Effect on

OCI

2019 Effect on net

profit/loss

2019 Effect on

OCI

Transaction exposure

EUR +/- 10% +/- 273 – +/- 302 –

GPB +/- 10% +/- 67 – +/- 78 –

USD +/- 10% +/- 82 – +/- 90 –

Translation exposure

EUR +/- 10% – +/- 362 – +/- 381

GPB +/- 10% – +/- 109 – +/- 121

USD +/- 10% – +/- 120 – +/- 136

Interest

Financial expenses +100 points -53 - -55 –

Financial expenses -100 points +53 - +55 –

Liquidity and financing risksLiquidity risk refers to the risk that the group has issues meeting its obligations with respect to its financial debts. Financing risk refers to the risk that the group is unable to raise adequate financing at a reasonable cost.

The group’s liquidity risk and liquidity planning is centrally managed. Liquidity needs for the upcoming year are reviewed at least annually in connection with budgeting. Liquidity planning is done monthly in connection with intra- group payments and transfers and also on an ongoing basis with a longer- term view based on the group’s financial developments and planned activities. Liquidity planning is done to ensure that the group’s liquidity risk is managed and no unnecessary costs arise from the financing of group activities. The objec-tive is for the group to manage its financial obligations under all reasonably plausible financial scenarios without considerable unforeseen expenses. The group’s policy of man-aging liquidity risks centrally results in any excess liquidity in the business being used to minimize outstanding loan amounts through the centralized cash pool structure.

The group’s overall financing is regulated by an agreement with a bank syndicate. The agreement does not contain any direct covenants, but does have restrictions on short- term loans in excess of a specified threshold amount. The interest rates are based on the group’s debt- to-equity ratio (net debt to EBITDA), which is currently at an acceptable level. In the credit agreement with the bank syndicate, there is an opportunity ta agree on additional credit facilities for financing future business acquisitions. The credit agreement has a re-maining term of 1.5-4 years (2.5-5 years).


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12/31/2020Within 3

months3–12

months 1–5 yearsMore than

5 years Total

Liabilities to credit institutions 42,962 128,885 6,468,019 0 6,639,866

Leasing liabilities 6,421 22,141 55,828 29,447 113,837

Accounts payable 49,887 0 0 0 49,887

Other current liabilities 28,287 0 0 0 28,287

Total 127,557 151,026 6,523,847 29,447 6,831,877

Credit and counterparty riskCredit risk refers to the risk that the counterparty in a transaction causes the group to incur a loss by failing to perform its contractual obligations. The group’s exposure to credit risk is primarily attributable to accounts receivable. To limit this risk, credit reports are run for new sales as needed. The financial situations of existing customers are also monitored on an ongoing basis in order to identify any early warning signs. The accounts receivable are spread over a large number of customers with no single customer accounting for a signifi-cant portion of the total accounts receivable. Likewise, accounts receivable are not concen-trated within a specific geographic area. The group thus considers the concentration risks to be limited.

The group’s maximum exposure to credit risk is estimated to correspond to the carrying amounts of all financial assets and appears in the table below.

12/31/2020 12/31/2019

Other long-term receivables 3,216 2,881

Accounts Receivables 242,719 280,225

Other current receivables 4,968 16,109


Maximum exposure to credit risk 898,878 672,694

For more information on the accounts receivable, refer to Note 19.

Credit lines NominalNom. SEK

(in thousands) Drawn Available

PIK credit line, EUR 25,211 253,054 253,054 0

PIK credit line, GBP 51,229 567,992 567,992 0

PIK credit line, USD 70,115 574,142 574,142 0

First lien credit line, EUR 301,180 3,023,099 3,023,099 0

Second lien credit line, EUR 15,908 159,677 159,677 0

Second lien credit line, GBP 32,513 360,480 360,480 0

Second lien credit line, USD 42,855 350,926 350,926 0

Other credit lines, EUR 907 9,108 9,108 0

Overdraft facility, SEK 300,000 300,000 0 300,000

Total 5,598,478 5,298,478 300,000

Available cash and cash equivalents 647,975

Total 5,598,478 5,298,478 947,975

The group’s financial liabilities excluding derivatives amounted to SEK 5,432,196k (5,605,707k) as of the balance sheet date. The distribution of maturities of contractual payment obligations for the group’s financial liabilities excluding derivatives is presented in the tables below. The amounts in these tables are not discounted values and, if applicable, also contain interest payments, which means that these amounts cannot be reconciled against the amounts report-ed on the balance sheet. Interest payments are determined based on the applicable conditions on the balance sheet date. Amounts in foreign currencies are translated into Swedish kronor at the exchange rate in effect on the balance sheet date.

The group’s loan agreements don’t include any special conditions that could result in payment due dates being significantly earlier than what appears in the tables.


45

Classification of financial instruments

The reported values of financial assets and financial liabilities broken down by valuation category, pursuant to IFRS 9, are shown in the table below.

12/31/2020Assets and liabilities valued at fair market value

via the income statementFinancial assets and liabilities

valued at acquisition cost Reported amount

Financial assets

Other long-term receivables – 3,216 3,216

Accounts receivables – 242,719 242,719

Other receivables – 4,968 4,968

Cash and cash equivalents – 647,975 647,975

– 898,878 898,878

Financial liabilities

Long-term liabilities to credit institutions – 5,398,863 5,398,863

Current liabilities to credit institutions – 33,333 33,333

Accounts payable – 49,887 49,887

Other current liabilities – 28,287 28,287

– 5,510,370 5,510,370

12/31/2019Assets and liabilities valued at fair market value

via the income statementFinancial assets and liabilities

valued at acquisition cost Reported amount

Financial assets

Other long-term receivables – 2,881 2,881

Accounts receivables – 280,225 280,225

Other receivables – 16,109 16,109

Cash and cash equivalents – 373,479 373,479

– 672,694 672,694

Financial liabilities

Long-term liabilities to credit institutions – 5,565,692 5,565,692

Current liabilities to credit institutions – 39,373 39,373

Derivative instruments 642 – 642

Accounts payable – 46,660 46,660

Other current liabilities – 23,673 23,673

642 5,675,398 5,676,040


46

Note 4 Management of capitalThe objective for capital management is to ensure that the group is able to continue its business operations in order to generate reasonable returns for shareholders and provide benefits to other stakeholders.

The group defines capital as shareholders equity plus liabilities to credit institutions and monitors its debt to adjusted EBITDA level on an ongoing basis.

At the end of the fiscal year, the debt- to-equity ratio amounted to:

12/31/2020 12/31/2019

Loans 5,432,196 5,605,707

Cash and cash equivalents -647,975 -373,479

Net liabilities 4,784,221 5,232,228

Total shareholder’s equity 3,324,657 3,520,053

Total shareholder’s equity and liabilities 8,108,878 8,752,281

Debt-to-equity ratio 59.0% 59.8%

Average Net debt / Adjusted EBITDA 7.0 7.7

Note 5 Net revenueThe group’s revenue consists of sales of medical devices. All revenues are recognized at the time when control of the products is transferred to the customer, which normally occurs on delivery. The group’s revenue is reported at a specific time. Thus, no part of the transaction price is allocated to uncompleted performance obligations in future accounting periods.

The tables below show the group’s revenue broken down by product category, geographical market and sales channel.

Income per product category* 2020 2019

Laryngectomy 1,440,851 1,390,598

Tracheostomy 222,326 207,302

ENT 91,911 131,010

Other income 6,105 7,490

Total 1,761,193 1,736,400

* Fees in UK are included in ENT instead of as previous years been allocated to the different product categories.

Net gains/losses on financial assets and financial liabilities broken down by valuation category, pursuant to IFRS9, are shown in the table below.

2020 2019

Fair market value via the income statement 642 -3,190

Loans and accounts receivables -13,142 -9,685

Exchange rates effects 297,202 -147,021

284,702 -159,896

Exchange rate effects above refer to loan receivables / accounts receivable and financial liabilities reported at accrued acquisition value.

Mark-to-market valuation of financial instruments

Financial assets and liabilities either valued at fair market value on the balance sheet or provided with information about their fair market value are classified into three different levels based on the information used to mark them to market.

Level 1 – Financial instruments marked to market based on observable (unadjusted) listed prices on an active market for equivalent assets and liabilities. A market is considered to be active if listed prices from an exchange, broker, industry group, pricing service, or supervisory authority are easily and regularly available and such prices represent actual and regularly occurring arms- length market transactions.

Level 2 – Financial instruments marked to market on the basis of valuation models based on other observable data for assets or liabilities aside from the listed prices included in Level 1, either directly (i.e., as price quotes) or indirectly (i.e., derived from price quotes).Examples of observable data for Level 2 include:

• Listed prices for similar assets and liabilities• Data that can form a basis for price assessment, e.g., market interest rates and yield curves

Level 3 – Financial instruments marked to market on the basis of valuation models, where essential inputs are based on non- observable data.

Financial assets and liabilities marked to market on the balance sheet consist of derivatives in the form of interest rate swaps. For other financial assets and liabilities, the reported amounts are estimated to be fair approximations of the fair market values since the maturities and/or mark- to-market interest rate adjustment periods are less than three months, where-by the discounted fair market value (FMV) based on prevailing market conditions is not estimated to have a significant effect.

Interest rate swaps are valued according to the procedure for Level 2. These are so- called OTC instruments and are valued using discounted cash flow (DCF) models based on con-tractual cash flow as well as interest and exchange rates determined on the basis of actual market listings on the balance sheet date.


47

Income per geographical area 2020 2019

North America 335,171 333,822

Southern Europe 403,306 365,733

Other Europe 927,218 926,913

Other Markets 95,498 109,932

Total 1,761,193 1,736,400

Income per sales channel 2020 2019

Direct to consumer* 899,766 862,927

Hospitals 473,597 478,797

Other channels 381,725 387,186

Other income 6,105 7,490

Total 1,761,193 1,736,400

*delivered to consumer, paid via reimbursement

Note 6 Operating costs breakdown

2020 2019

Employee benefits (Note 10) -562,753 -559,434

Depreciation (Note 7) -307,571 -298,275

Cost of material -207,678 -229,581

Consulting fees -59,868 -73,875

Travel expenses -17,906 -37,101

Outbound freight -28,836 -33,734

Costs for rented premises -11,204 -11,344

Other external expenses related to SG&A and research and development -207,282 -197,319

Other operating expenses -20,265 -2,849

Total -1,423,363 -1,443,512

Note 7 Depreciation and write-downs

2020 2019

Cost of goods sold -67,538 -57,100

Sales expenses -210,674 -213,917

General and administrative expenses -29,359 -27,258

Total -307,571 -298,275

Not 8 Compensation to auditors

2020 2019

Deloitte AB

Audit assignments -2,497 -2,576

Auditing activities in addition to audit assignments -234 -348

Tax consulting -945 -1,519

Other services -141 -555

Other auditors

Audit assignments -105 -106

Tax consulting -283 -965

Other services -177 -844

Total -4,382 -6,913

Audit assignments refers to the auditor’s compensation for statutory audits. The work includes inspection of the annual report, the consolidated financial statements, the book-keeping, and the management of the board and CEO as well as fees for audit advice supplied in connection with the audit assignment.

Auditing activities in addition to audit assignments relates to work tasks that pop up, which are carried out by the company’s auditor, along with advising or other assistance brought about by observations made during the audit inspection. Tax consulting is reported separately. Other services mainly includes advice in connection with financial matters.


48

Note 9 Leasing contractsAtos Medical apply IFRS 16 for reporting leasing contracts. The standard means that all leases to which Atos Medical is a party are recognized in the balance sheet, partly as a fixed asset (the right to use a leased object) and partly as a financial liability (obligation for future rental payments). Simplified rules exist for short- term lease contracts and low- value leasing contracts where such assets are exempt from being recognized in the balance sheet.

The leasing contracts included in the consolidated balance sheet are related to office and warehouse premises, production premises, vehicles and IT- related equipment.

Amount in the Consolidated report on the financial position

Right of use assets OB/CB per leasing group

Buildings VehiclesIT-

equipment Other Total

Opening balance 01/01/2020 80,410 21,649 1,639 1,342 105,040

Investments 22,728 18,703 319 – 41,750

Depreciation -19,326 -16,004 -625 -469 -36,424

Terminated contracts 220 19 47 – 286

Exchange rate differences -3,022 -1,103 -75 -111 -4,311

Closing balance 12/31/2020 81,010 23,264 1,305 762 106,341

Opening balance 01/01/2019 86,829 25,269 1,598 1,884 115,580

Investments 11,187 12,713 490 – 24,390

Depreciation -17,015 -15,152 -441 -522 -33,130

Terminated contracts -117 -909 – – -1,026

Exchange rate differences -474 -272 -8 -20 -774

Closing balance 12/31/2019 80,410 21,649 1,639 1,342 105,040

The Right of use assets are included in the Property, plant and equipment in the Consolidated report on the financial position.

Leasing liability in the Consolidated report on the financial position

12/31/2020 12/31/2019

Short-term liability 28,555 29,576

Long-term liability 85,282 82,192

Total 113,837 111,768

The leasing liabilities are included in the Liabilities to credit institutions in the Consolidated report of the financial position. For information regarding the maturities of the leasing liabilities, see Note 3.

Amount in the Consolidated profit and loss statement

2020 2019

Depreciation Right of use assets -36,424 -33,130

Interest expenses Leasing liability -5,543 -5,594

For the Group, costs for short- term leasing contracts and low- value leasing contracts are of minor value and are therefore not relevant to report.

Note 10 Employees and Employees benefits

Average number of employees in 2020

Women Men Total

Parent company

Sweden – – –

Total – Parent company – – –

Subsidiaries

North America 116 52 168

Europe Central 114 82 196

Europe North & South 235 160 395

New Markets 47 34 81

Total – Subsidiaries 512 328 840

Total – Group 512 328 840


49

Average number of employees in 2019

Women Men Total

Parent company

Sweden – – –

Total – Parent company – – –

Subsidiaries

North America 120 53 173

Europe Central 122 84 206

Europe North & South 215 149 364

New Markets 36 30 66

Total – Subsidiaries 493 316 809

Total – Group 493 316 809

Board members and other senior executives

12/31/2020 12/31/2019

Parent company

Women:

Board of directors – –

Men:

Board of directors 3 3

Other senior executives incl. CEO – –

Total – Parent company 3 3

Group

Women:


Other senior executives incl. CEO 3 3

Men:


Other senior executives incl. CEO 7 7

Total – Group 13 13

Salaries and benefits

2020 2019

Parent company – –

Subsidiaries

Salaries and other benefits -438,298 -445,086

Social welfare taxes -97,333 -90,551

Retirement benefit costs -27,122 -23,797

Total salaries and benefits for the group -438,298 -445,086

Total social welfare taxes for the group -97,333 -90,551

Total retirement benefit costs for the group -27,122 -23,797

Total – Group -562,753 -559,434

Distribution of salaries and other benefits between senior executives

2020 2019

Group

Salaries and benefits to Board and CEO -10,849 -8,059

including bonuses, profit sharing and similar benefits to Board and CEO -2,491 -604

Salaries and benefits to other senior executives (9 persons)* -28,720 -24,344

including bonuses, profit sharing and similar benefits to other senior executives -5,459 -4,872

Costs for retirement benefits to other senior executives -672 -653

Total – Group -40,241 -33,056

* In 2019 and 2020 one of the senior executives have not been employed by the company and are therefore not

reported in the table above.


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Retirement benefits

The cost this year for defined- contribution retirement plans is SEK -27,122k (-23,797k).

For civil servants in Sweden, the ITP 2 plan’s defined- benefit retirement commitments for retirement and family pensions (alternatively, family pensions) are secured by an insurance policy from Alecta. According to a statement by the Swedish Financial Reporting Board, UFR 10 Reporting of the Retirement Plan, ITP 2, which is financed via insurance in Alecta, is a defined- benefit plan that covers multiple employers. For the 2020 fiscal year, the company has not had access to the information needed to be able to report its propor-tionate share of the plan’s assets, liabilities, and costs, making it impossible to recognize the plan as a defined- benefit plan. The ITP 2 retirement plan, which is secured by an in-surance policy from Alecta, has therefore been reported as a defined- contribution plan. The premium for the defined- benefit retirement and family pension is individually calculated and depends inter alia on wages, previously earned retirement benefits, and expected remaining length of service. The fees expected for ITP 2 insurance policies signed with Alecta for the next reporting period are SEK 6.9m (5.6m). The group pays an insignificant amount of this plan.

The collective consolidation ratio includes the market value of Alecta’s assets as a per-centage of the insurance commitments, calculated according to Alecta’s insurance method-ology and assumptions, which do not comply with IAS 19. The collective consolidation ratio may typically be allowed to vary from 125% to 155%. If Alecta’s collective consolidation ratio falls below 125% or rises above 155%, measures must be adopted in order to create favorable conditions for the consolidation ratio to return to a normal level. In the event of a low consolidation ratio, one corrective measure could be to raise the premium for new policies and renewals of existing benefits. For high consolidation ratios, a corrective measure could be to lower the premiums. As of the end of 2020, Alecta’s surplus in terms of collective consolidation was 148% (148%).

Agreement on termination payments

In case of termination from the company, the CEO has a termination period of 15 months, at the CEO’s own notice of termination the period is 12 months. During the termination period full benefits are paid.

Note 11 Financial income

2020 2019

Fair market value, derivatives 642 –

Exchange rate differences 311,689 –

Total 312,331 0

Note 12 Financial expenses

2020 2019

Interest expense -397,819 -395,335

Fair market value, derivatives – -3,190

Exchange rate differences – -144,342

Total -397,819 -542,867

All interest expenses are attributable to financial liabilities that have been valued at the amortized cost.

Note 13 Income taxes

2020 2019

Current taxes

Current taxes on net income for the year -62,305 – 25,358

Adjustments reported this year related to tax from prior years -3,459 -935

Deferred taxes

Attributable to temporary differences in intangible assets 44,972 45,506

Attributable to temporary differences in tangible assets -504 4,591

Attributable to tax loss carry forwards* -6,693 -108,990

Other items -10,135 1,759

Total taxes on net income for the year -38,124 -83,427


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Deferred tax assets and tax liabilities

The group’s deferred tax assets and tax liabilities relate to the following items:

12/31/2020 12/31/2019

Deferred tax assets

Unused tax loss deductions 13,979 20,681

Inter-company profit in inventory 19,718 20,222

Write-down accounts receivable 240 3,395

Leasing contracts 1,847 1,599

Temporary differences in interest rate derivatives – 137

Other deductible temporary differences 7,036 4,207

Deferred tax assets 42,820 50,241

Deferred tax liabilities

Untaxed reserves 12,285 –

Temporary differences in intangible assets 761,089 843,991

Other tax deductible temporary differences 1,751 3,016

Deferred tax liabilities 775,125 847,007

Deferred tax assets are valued at the maximum amount likely to be recovered based on current and future taxable results. The group has unused tax loss carryforwards in the amount of SEK 117,076k (518,393k), of which SEK 49,765k (420,513k) relate to non- reported tax loss carryfor-wards. These mainly concern France and it is uncertain whether these loss carryforwards will be utilized due to uncertainty about sufficient taxable surpluses will be generated. No deferred tax asset has been capitalized for net interests carryforward.

The tax rates for calculating deferred tax varies and is dependent on the tax rate in the respective subsidiary’s country.

Reconciliation of tax income for the year

2020 2019

EBT 254,393 -247,552

Tax has been calculated based on the Swedish corporate income tax rate (21.4%) -54,440 52,976

Tax effect of other tax rates for foreign subsidiaries 6,599 9,741

Tax effect of costs included in tax – 10,504

Tax loss carry forwards (previously not accounted for) 74,467 1,199

Tax effect of adjusted tax rate -1,822 –

Non deductible costs* -59,469 -156,912

Total -34,665 -82,492

Adjustments reported this year related to tax from prior years -3,459 -935

Reported tax cost/income for the year -38,124 -83,427

* On January 1, 2019, new interest deduction limitation rules came into force in Sweden. The rules mean that a company’s negative interest net may be deducted up to a maximum of 30% of taxable EBITDA. The Group has not capitalized any deferred tax asset based on net interest carryforward.

No tax has been reported in “Other comprehensive income” or directly posted to Share-holder’s equity.


52

Note 14 Composition of the groupAs of December 31, 2020, the group included the following subsidiaries:

Name EIN (“organisationsnummer”) Country of operations Operations Ownership (%)1

Lary 2 AB 559064-1519 Sweden Holding companies 100%

Lary 3 AB 550964-1543 Sweden 100%

Lary 4 AB 559063-2211 Sweden 100%

Atos Medical AB 556268-7607 Sweden Sales, marketing 100%

Atos Medical Inc. 3173183 USA and distribution of 100%

Atos Medical GmbH HRB 6311 Germany medical devices 100%

Atos Medical BV 34200878 Netherlands 100%

Atos Medical Spain, SL B83945618 Spain 100%

Atos Medical BVBA 870179971 Belgium 100%

Atos Medical SAS 522119510 France 100%

Atos Medical Japan Inc 0100-01-148116 Japan 100%

Atos Medical Brasil Ltda 35226777978 Brazil 99%

Atos Medical SRL PD-421894 Italy 100%

Atos Medical AS 914430526 Norway 100%

Atos Medical UK Ltd 4206141 United Kingdom 100%

Atos Medical Pty 609712496 Australia 100%

Atos Medical Ltd 5886891 New Zealand 100%

Atos Medical Aps 38051563 Denmark 100%

Atos Medical Poland Sp.z o. o. KRS 0000667950 Poland 100%

Atos Medical Canada Inc. 2568802 Canada 100%

Griffin Laboratories Inc. 33-0677468 USA 100%

Heimomed Heinze GmbH & Co KG HRA 18146 Germay 100%

Heimomed Heinze Verwaltungs GmbH HRB 4261 Germany 100%

Iskia GmbH & Co KG HRA 22575 Germany 100%

Iskia Verwaltungs GmbH HRB 113,929 Germany 100%

Atos Medical Austria GmbH FN 494039 d Austria 100%

1) The group does not have any holdings with a non- controlling interest.

As of December 31, 2019, the composition of the group was the same as the end of 2020, except that in 2020 the company Platon Medical Ltd was merged into Atos Medical UK Ltd.


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Note 15 Intangible assets

Goodwill TrademarksCustomer

relationships TechnologyOther intangible

assets Total

Opening acquisition cost 01/01/2020 5,436,873 1,445,467 2,050,054 843,887 96,530 9,872,811

Investments – – – 26,455 23,429 49,884

Sales/disposals – – – -15,423 – -15,423

Reclassifications – – – 803 -803 0

Exchange rate differences -293,016 -82,452 -101,695 -2,308 -390 -479,861

Closing accumulated acquisition cost 12/31/2020 5,143,857 1,363,015 1,948,359 853,414 118,766 9,427,411

Opening depreciation and write-downs 01/01/2020 0 -307 -604,149 -139,341 -76,436 -820,233

Depreciation for the year – -34 -181,359 -55,828 -5,346 -242,567

Write-down for the year – – – – -313 -313

Sales/disposals – – – 14,571 – 14,571

Exchange rate differences – – 41,089 1,907 282 43,278

Closing accumulated depreciation and write-downs 12/31/2020 0 -341 -744,419 -178,691 -81,813 -1,005,264

Reported amount 5,143,857 1,362,674 1,203,940 674,723 36,953 8,422,147

Opening acquisition cost 01/01/2019 5,285,928 1,407,842 2,002,326 812,929 89,097 9,598,122

Investments 4,141 – – 29,077 8,683 41,901

Sales/disposals – – – – -378 -378

Reclassifications1 12,876 – – 955 -954 12,877

Exchange rate differences 133,928 37,625 47,728 926 82 220,289

Closing accumulated acquisition cost 12/31/2019 5,436,873 1,445,467 2,050,054 843,887 96,530 9,872,811

Opening depreciation and write-downs 01/01/2019 0 -239 -408,822 -89,842 -71,360 -570,263

Depreciation for the year – -68 -183,994 -48,903 -4,671 -237,636

Write-down for the year – – – – -726 -726

Sales/disposals – – – – 371 371

Exchange rate differences – – -11,333 -596 -50 -11,979

Closing accumulated depreciation and write-downs 12/31/2019 0 -307 -604,149 -139,341 -76,436 -820,233

Reported amount 5,436,873 1,445,160 1,445,905 704,546 20,094 9,052,578

1) The reclassification of Goodwill is due to the adjustment of the PPA for the Heimomed acquisition in 2018.


54

Goodwill has been allocated to the following cash- generating units:

Goodwill 12/31/2020 12/31/2019

USA 876,360 993,446

United Kingdom 731,074 805,400

Germany 1,092,796 1,132,359

Rest of world 2,443,627 2,505,668

Reported amount 5,143,857 5,436,873

Trademarks has been allocated to the following cash- generating units:

Trademarks 12/31/2020 12/31/2019

USA 240,393 273,522

United Kingdom 206,734 227,752

Germany 272,563 283,319

Rest of world 642,984 660,567


Goodwill and trademarks are evaluated on an annual basis to assess the need for write- downs or whenever there is an indication that write- downs are required. Where applicable, impairment charges are recognized in an amount equal to the carrying amount of the asset less its estimated recovery value (ERV), which is the higher of its fair market value minus any selling costs and its useful value. The useful value relates to the sum of the net present value of estimated future cash flows and the estimated recovery value at the end of the asset’s useful lifespan. When calculating the useful value, future cash flow is discounted at an interest rate that takes the prevailing market risk- free interest rate as well as the risk associated with the specific asset into account, the so- called WACC (Weighted Average Cost of Capital). The calculations are based on estimated future cash flows based on past results, budgets approved by the board, strategic plans, and market data. In predicting future cash flows, assumptions are primarily made relating to sales growth, operating margins, investments, and discount rates. The cash- generating units include the largest geographic segments: USA, United Kingdom, and Germany. Other countries have been lumped together into one segment: Rest of world. The WACC that has been applied ranges from 8.5-10.0% (8.7-10.9% ) before taxes and reflects the specific risks associated with the respective markets/currencies. For the terminal period, a growth rate of 1-2% (1-2%) is applied, which coincides with the group’s long- term outlook for inflation and the market’s long- term growth.

Based on the assumptions presented above, the useful value exceeds the carrying amounts for goodwill and trademarks. If the WACC is increased with 1%, this should result in the need for impairment charges of the Germany market. The group will closely monitor the developments against projected forecasts.


55

Note 16 Property, plant, and equipment

Buildings and landMachinery and other

technical installations Inventory and equipment Assets under construction Total

Opening acquisition cost 01/01/2020 54,221 54,048 103,720 25,627 237,616

Investments – 15 12,150 31,702 43,867

Sales/disposals -24,317 -1,453 -9,064 – -34,834

Reclassifications – 9,352 23,543 -32,895 0

Exchange rate differences -630 -166 -5,878 -114 -6,788

Closing accumulated acquisition cost 12/31/2020 29,274 61,796 124,471 24,320 239,861

Opening depreciation 01/01/2020 -4,477 -16,878 -42,948 -396 -64,699

Depreciation for the year -1,845 -7,734 -18,048 -640 -28,267

Write-down for the year – – – – –

Sales/disposals – 409 7,072 – 7,481

Exchange rate differences 256 28 3,810 42 4,136

Closing accumulated depreciation 12/31/2020 -6,066 -24,175 -50,114 -994 -81,349

Reported amount 23,208 37,621 74,357 23,326 158,512

Opening acquisition cost 01/01/2019 65,781 37,306 87,696 26,526 217,309

Investments 26 734 15,166 20,456 36,382

Sales/disposals – -419 -6,243 – -6,662

Reclassifications -12,876 16,425 4,971 -21,397 -12,877

Exchange rate differences 1,290 2 2,130 42 3,464

Closing accumulated acquisition cost 12/31/2019 54,221 54,048 103,720 25,627 237,616

Opening depreciation 01/01/2019 -2,492 -10,618 -29,143 -390 -42,643

Depreciation for the year -1,963 -6,386 -18,420 – -26,769

Write-down for the year – – -14 – -14

Sales/disposals – 124 5,694 – 5,818

Exchange rate differences -22 2 -1,065 -6 -1,091

Closing accumulated depreciation 12/31/2019 -4,477 -16,878 -42,948 -396 -64,699

Reported amount 49,744 37,170 60,772 25,231 172,917


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Note 17 Other financial assets

12/31/2020 12/31/2019

Opening reported amount 2,881 5,096

Additional receivables 660 236

Adjusted receivables -171 –

Change of value of derivatives – -2,548

Exchange rate differences -154 97

Closing reported amount 3,216 2,881

Other financial assets 12/31/2020 12/31/2019

Other items 3,216 2,881

Reported amount 3,216 2,881

Note 18 Inventory

12/31/2020 12/31/2019

Raw materials and consumables 29,167 21,698

Work in progress 14,245 12,169

Finished goods and merchandise 78,677 51,291

Supplier advances 1,968 2,147


Inventory reported as an expense during the year is included in the “Cost of goods sold” and amounted to SEK 212,315k (212,152k). Inventory impairment charges of 11,576k (14,279k) have been included in the “Cost of goods sold”.

Note 19 Accounts receivable

12/31/2020 12/31/2019

Gross receivables 273,170 297,675

Reserve for doubtful accounts -30,451 -17,450

Net receivables after reserve for doubtful accounts 242,719 280,225

Accounts receivable are amounts that relate to customers in respect of products sold in operating activities. Accounts receivable are generally due for payment within 30-60 days and all accounts receivable are therefore classified as current assets. Accounts receivable are recognized initially at transaction price. The group has accounts receivable for the purpose of collecting contractual cash flows and therefore values them at amortized cost using the effective interest method at subsequent reporting dates.

The group applies the simplified method for calculating expected credit losses. The method means that expected losses during the entire term of the receivable are used as a basis for accounts receivable. In order to calculate expected credit losses, accounts receivable have been grouped according to credit risk characteristics, number of days of payment delay and geographical factors.

The expected credit loss levels are based on the customers’ payment history over the past 2 years together with the loss history for the same period. The history is adjusted with for-ward- looking factors based on currently available information.


57

Based on this, the loss provision as per December 31, 2020 for accounts receivable is as follows:

12/31/2020 Not due Due 1-90 days Due 91-180 days Due 181-365 days Due more than 365 days Total

Expected loss level % 2.2% 5.0% 21.6% 40.9% 99.0% 11.1%

Gross Accounts receivables 170,096 55,901 16,312 17,528 13,333 273,170

Credit loss reserve -3,755 -2,809 -3,525 -7,168 -13,194 -30,451

12/31/2019 Not due Due 1-90 days Due 91-180 days Due 181-365 days Due more than 365 days Total

Expected loss level % 0.5% 2.5% 25.5% 35.2% 69.4% 5.9%

Gross Accounts receivables 198,172 63,849 14,616 10,165 10,873 297,675

Credit loss reserve -1,001 -1,606 -3,722 -3,575 -7,546 -17,450

Credit loss reserve

Changes in the credit loss reserve are specified below:

12/31/2020 12/31/2019

Opening balance -17,450 -20,497

Reserve for doubtful accounts for the year, change reported in the profit and loss statement

-31,283 -9,685

Exchange rate difference 3,878 -210

Reversal of used amount 14,404 12,942

Total -30,451 -17,450

Note 20 Prepaid expenses and accrued income

12/31/2020 12/31/2019

Pre-paid IT-related expenses 3,578 7,909

Pre-paid rent 7,452 3,391

Pre-paid insurance 1,115 1,551

Accrued income 552 699




58

Note 21 Stock, shareholder’s equity, and distribution of profits

Number of shares A series Preferred shares Total

As of December 31. 2019 36,627,109 1,796,649 38,423,758

As of December 31. 2020 36,627,109 1,796,649 38,423,758

All shares have a nominal value of SEK 1, with a registered share capital as of 12/31/2020 in the amount of 38,423,758 (38,423,758).

The shares consist of four classes of stock, series A and B ordinary shares and series C and D preferred shares. All ordinary and preferred shares of series B are entitled to 1 vote per share. Series A ordinary shares are entitled to 10 votes per share. All shares have been paid in full and no shares are reserved for transfer due to option agreements or other contractual arrangements. No series B ordinary shares have been issued.

Other paid-in capital

Other paid- in capital consists of share premiums from share subscriptions (share premium reserve).

Translation reserve

Translation reserves relate to exchange rate differences from the conversion of foreign operations to SEK, which are reported in “Other comprehensive income”.

Proposal for distribution of profits

The following proposals for the distribution of profits will be presented at the general assembly:

The following is available to the general assembly: 3,809,782,142

The board proposes that the following be distributed to shareholders: 0

The board proposes that the following be carried forward: 3,809,782,142

No dividends were paid in 2019 or 2020.

Note 22 Liabilities to credit institutions

12/31/2020 12/31/2019

Liabilities to credit institutions 5,318,359 5,493,939

Leasing liabilities 113,837 111,768


The bank loans have variable interest rates with 3-11% margin. The loans have a grace period until 2022. About SEK 1,470m (1,446m) of the loans consist of “PIK loans” (Payment In Kind loans), where instead of being collected, the interest is added to the amount of the debt. For loans that are not PIK loans the interest period may be selected with a duration of one to six months.

The group’s interest rate swap agreements expired in July 2020 and no new swap agreements has been signed. For additional information on the interest rate swap agreement and the maturity schedule of the debt see Note 3. The loan agreement contains specific conditions or “covenants”. These conditions have been met during the entire term of the loan. The conditions are based on maintaining an acceptable debt to EBITDA ratio. The covenant test only needs to be carried out if the group utilizes more than a specific threshold value of its overdraft facility.


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Note 23 Accrued expenses and prepaid income

12/31/2020 12/31/2019

Salaries and other personnel costs 90,929 84,263

Audit and other external consulting fees 13,229 12,625

Interest 710 914



Note 24 Pledged collateral and contingent liabilities

Pledged collateral 12/31/2020 12/31/2019

Restricted funds 2,811 2,921

Assets at subsidiaries 3,267,799 3,462,964

Total 3,270,610 3,465,885

Contingent liabilities

Performance guarantee abroad 292 333

Customs guarantees 155 45

Total 447 488

The group has pledged the assets of subsidiaries as collateral for its own loans from credit institutions.

Note 25 Mergers and acquisitionsNo share purchase acquisitions have been made in 2020 or in 2019.


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Note 26 Cash flow from financing activities

Long-term liabilities to credit institutions

Short-term liabilities to credit institutions

Opening balance 01/01/2019 5,144,281 14,283

Items affecting cash flow

Assumption of loans – –

Loan repayments – –

Leasing liabilities repayments -37,334 –

Items not affecting cash flow

Capitalized interest costs 164,599 –

Prepaid loan expenses 17,607 –


Reclassification 4,486 -4,486

Translation differences 153,169 –

As of December 31. 2019 5,566,334 39,373

Items affecting cash flow

Assumption of loans – –

Loan repayments – –

Leasing liabilities repayments – -40,944

Items not affecting cash flow

Capitalized interest costs 159,954 –

Prepaid loan expenses 17,605 –


Translation differences -347,012 –

As of December 31. 2020 5,398,863 33,333

Note 27 Related-party transactionsAside from the companies that directly or indirectly own Lary 1 AB, the members of the parent company’s board and the group’s senior executives and their close family members are also considered to be related parties. In addition, companies in which a significant portion of the votes are directly or indirectly owned by the aforementioned parties as well as companies where these individuals can exert considerable influence are also considered to be related parties. No related- party transactions have taken place during the year.

Transactions between the company and its subsidiaries which constitute related- party transactions have been eliminated via consolidation and information on these transactions is therefore not provided in this note.

Note 28 Events after the balance sheet dateIn February 2021, there was a refinancing made where parts of the existing credit facilities were renegotiated with new terms. The PIK loan has been repaid in full. The new bank loans have a variable interest rate with a margin of 4-7.5%. The new loans mature in 2028 and 2029.


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Note 2020 2019

Net revenue 0 0

Gross profit 0 0

General and administrative expenses 2 -101 -1,188

Net earnings(loss) from financial items

Exchange rate differences -57 23

Net earnings(loss) after financial items -158 -1,165

Appropriations

Group contributions 158 1,165

Earnings before taxes 0 0

Tax on net income for the year 0 0

NET EARNINGS(LOSS) FOR THE YEAR 0 0

Parent company report on comprehensive income

The com pre hen sive in come for the year are not spec i fied due to no trans ac tions dur ing the year.

Parent company profit and loss statement Parent company balance sheet

Note 12/31/2020 12/31/2019

ASSETS

Fixed assets

Long-term financial assets

Shares in group companies 3 3,791,639 3,791,639

Long-term receivable group companies 4 3,648 3,490

3,795,287 3,795,129

Total Fixed assets 3,795,287 3,795,129

Current assets

Receivables

Other receivables – –

0 0


Total current assets 53,210 53,599

TOTAL ASSETS 3,848,497 3,848,728

EQUITY AND LIABILITIES

Equity

Restricted equity

Shareholder’s equity 38,424 38,424

38,424 38,424

Unrestricted equity

Share premium reserve 3,809,782 3,809,782

Retained earnings 0 0

Net earnings(loss) for the year 0 0

3,809,782 3,809,782

Total equity 3,848,206 3,848,206

Current liabilities

Accounts payable 238 0

Accrued expenses and prepaid income 5 53 522

291 522

TOTAL EQUITY AND LIABILITIES 3,848,497 3,848,728


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Restricted equity Unrestricted equity

Shareholder’s equity Share premium reserve Retained earnings or loss Net earnings (loss) for the year Total equity

Shareholder’s equity on Jan. 1. 2019 38,424 3,809,782 -1,919 1,919 3,848,206

Allocation of prior year’s profit or loss – – 1,919 -1,919 –

Net earnings(loss) for the year – – – – –

Other comprehensive income – – – – –

Comprehensive income for the year – – – – –

Ownership transactions


Shareholder’s equity on Dec. 31. 2019 38,424 3,809,782 – – 3,848,206

Shareholder’s equity on Jan. 1. 2020 38,424 3,809,782 – – 3,848,206

Allocation of prior year’s profit or loss – – – – –

Net earnings(loss) for the year – – – – –

Other comprehensive income – – – – –

Comprehensive income for the year – – – – –

Ownership transactions


Shareholder’s equity on Dec. 31. 2020 38,424 3,809,782 – – 3,848,206

Parent company report on changes in shareholder’s equity


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2020 2019

Cash flow from operating activities

Operating profit(loss) -101 -1,188

Unrealized exchange rate gains(losses) -57 23

Cash flow from operating activities before changes in working capital -158 -1,165

Changes in working capital

Decrease(+)/increase(-) in other current receivables 238 –

Decrease(-)/increase(+) in other current liabilities -469 497

Cash flow from operating activities -389 -668

Investment activities

Cash flow from investment activities 0 0

Financing activities

Cash flow from financing activities 0 0

Net increase(decrease) in cash flow -389 -668

Cash and cash equivalents at beginning of year 53,599 54,267

Cash and cash equivalents at end of year 53,210 53,599

Parent company cash flow analysis


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Parent company notes

Note 1 Accounting principlesThe parent company is applying the Annual Accounts Act (“Årsredovisningslagen”) and the Swedish Financial Reporting Board’s recommendation RFR 2, Reporting of legal entities (“Redovisning för juridiska personer”). The application of RFR 2 requires the parent company to apply all EU- approved IFRSs to the full extent possible within the scope of the Annual Accounts Act and the Pension Obligations Benefit Act (“Tryggandelagen”), taking into account the relationship between reporting and taxation. Amendments to RFR 2 that entered into force in 2020 have not had any significant effect on the parent company’s financial reports for the fiscal year. The differences between the parent company’s and group’s accounting principles are described below:

Classification and presentation

The parent company’s profit and loss statement and balance sheet are presented in accordance with the templates in the Annual Accounts Act. The main difference between IAS 1 Presentation of Financial Statements and the presentation of the consolidated financial statements is in the reporting of financial income and expenses, fixed assets, shareholder’s equity, and the appearance of “Provisions” in a separate column.

Subsidiaries

Shares of subsidiaries are reported at acquisition cost in the parent company’s balance sheet. Transaction costs are included in the carrying amounts for shares of group companies. Dividends from subsidiaries are recognized as income when the dividends are considered to be safe and can be reliably calculated.

Financial instruments

The parent company does not apply IFRS 9 Financial Instruments. In accordance with the Annual Accounts Act, the parent company applies a method based on acquisition cost.

Borrowing costs

Borrowing costs are recognized in the profit and loss statement during the period to which they relate.

Approved amendments and proposed changes to RFR 2 that have not yet entered into force

Man age ment es ti mates that amend ments and pro posed changes to RFR 2 that have not yet en tered into force are not ex pect ed to have any sig nif i cant ef fect on the par ent com pa ny’s fi nan cial re ports once they are ap plied for the first time.

Note 2 Compensation to auditor

2020 2019

Deloitte AB

Audit assignments -25 −25

Total -25 −25


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Note 3 Shares in group companiesCompany ownership of shares in group companies

Reported amount

Company name Equity stake1

Number of shares 12/31/2020 12/31/2019

Lary 2 AB 100% 37,965,893 3,791,639 3,791,639

Total 3,791,639 3,791,639

1 Equity stake is equal to the share of voting rights.

Company name EIN (“Org.nr”) Registered office

Lary 2 AB 559064-1519 Stockholm

The parent company has not made any acquisitions or disposals of assets over the course of the year.

For the complete group organizational structure, see the group notes, Note 14.

Note 4 Receivables from Group companies

12/31/2020 12/31/2019

Opening acquisition costs 3,490 2,325

Additional receivables 158 1,165

Closing accumulated acquisition costs 3,648 3,490

Opening write-downs 0 0

Closing accumulated write-downs 0 0


Note 5 Accrued expenses and prepaid income

12/31/2020 12/31/2019

Audit fees 25 25

Legal fees 28 497

Reported amount 53 522


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Note 6 Events after the balance sheet dateNo significant events have occurred after the end of the fiscal year.

The annual report and consolidated financial statements were approved for release by the board on April 21, 2021. The consolidated profit and loss statement, comprehensive income report, and report on the financial position as well as the parent company’s profit and loss statement and balance sheet will be presented for approval at the general assembly on April 21, 2021.

The Board of Directors and CEO hereby certify that the annual report has been prepared in accordance with the Annual Accounts Act (“Årsredovisningslagen”) and RFR 2 Reporting of legal entities (“Redovisning för juridiska personer”) and provides a true and fair view of the company’s financial position and results, and that the management report provides a true and fair overview of the company’s operations, financial position, and results as well as describes significant risks and uncertainty factors the company faces. The Board of Directors and CEO hereby certify that the consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and provide a true and fair view of the group’s financial position and results, and that the management report for the group provides a true and fair overview of the company’s operations, financial position, and results as well as describes significant risks and uncertainty factors the group’s companies face.

Malmö April 21, 2021

Lars Frederiksen Ragnar Hellenius Andreas Kumeth Britt Meelby Jensen Chairman of the Board Board member Board member Managing Director/CEO

Our audit report was issued on April 21, 2021

Deloitte AB

Maria Ekelund Authorized Public Accountant


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Report on the annual accounts and consolidated accounts

Opinions

We have audited the annual accounts and consolidated accounts of Lary 1 AB for the financial year 2020-01-01 – 2020-12-31. The annual accounts and consolidated accounts of the company are included on pages 28-66 in this document.

In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the parent company as of 31 December 2020 and its financial performance and cash flow for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December 2020 and their financial performance and cash flow for the year then ended in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU, and the Annual Accounts Act. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts.

We therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet for the parent company and the group.

Basis for Opinions

We conducted our audit in accordance with International Stand-ards on Auditing (ISA) and generally accepted auditing standards in Swe den. Our responsibilities under those standards are further described in the Auditor’s Responsibilities section. We are inde-pendent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.

Other Information than the annual accounts and consolidated accounts

The Board of Directors and the Managing Director are responsible for the other information. The other information is found on pages 1-27 but does not include the annual accounts, consolidated ac-counts and our auditor’s report thereon.

Our opinion on the annual accounts and consolidated accounts does not cover this other information and we do not express any form of assurance conclusion regarding this other information.

In connection with our audit of the annual accounts and consoli-dated accounts, our responsibility is to read the information iden-tified above and consider whether the information is materially inconsistent with the annual accounts and consolidated accounts. In this procedure we also take into account our knowledge other-wise obtained in the audit and assess whether the information otherwise appears to be materially misstated.

If we, based on the work performed concerning this information, conclude that there is a material misstatement of this other infor-mation, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors and the Managing Director are responsible for the preparation of the annual accounts and consolidated accounts and that they give a fair presentation in accordance with the Annual Accounts Act and, concerning the consolidated accounts, in accordance with IFRS as adopted by the EU. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.

In preparing the annual accounts and consolidated accounts, The Board of Directors and the Managing Director are responsible for

the assessment of the company’s and the group’s ability to continue as a going concern. They disclose, as applicable, matters related to going concern and using the going concern basis of accounting. The going concern basis of accounting is however not applied if the Board of Directors and the Managing Director intends to liquidate the company, to cease operations, or has no realistic alternative but to do so. Auditor’s responsibility

Our objectives are to obtain reasonable assurance about whether the annual accounts and consolidated accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, indi-vidually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual accounts and consolidated accounts.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of the company’s internal control relevant to our audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control.

Auditor’s reportTo the general meeting of the shareholders of Lary 1 AB corporate identity number 559064-1527


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• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclo-sures made by the Board of Directors and the Managing Director.

• Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of accounting in preparing the annual accounts and consolidated accounts. We also draw a conclusion, based on the audit evidence obtained, as to whether any material uncertainty exists related to events or conditions that may cast significant doubt on the company’s and the group´s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s re-port to the related disclosures in the annual accounts and consolidated accounts or, if such disclosures are inadequate, to modify our opinion about the annual accounts and con-solidated accounts. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause a company and a group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the annual accounts and consolidated accounts, including the disclosures, and whether the annual accounts and consolidated accounts represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated accounts. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our opinions.

We must inform the Board of Directors of, among other matters, the planned scope and timing of the audit. We must also inform of significant audit findings during our audit, including any significant deficiencies in internal control that we identified.

Report on other legal and regulatory requirements

Opinions

In addition to our audit of the annual accounts and consolidated accounts, we have also audited the administration of the Board of Directors and the Managing Director of Lary 1 AB for the financial year 2020-01-01 - 2020-12-31 and the proposed appropriations of the company’s profit or loss.

We recommend to the general meeting of shareholders that the profit to be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year.

Basis for Opinions

We conducted the audit in accordance with generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor’s Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors is responsible for the proposal for appropri-ations of the company’s profit or loss. At the proposal of a dividend, this includes an assessment of whether the dividend is justifiable considering the requirements which the company’s and the group’s type of operations, size and risks place on the size of the parent company’s and the group’s equity, consolidation requirements, liquidity and position in general.

The Board of Directors is responsible for the company’s organi-zation and the administration of the company’s affairs. This includes among other things continuous assessment of the company’s and the group´s financial situation and ensuring that the company’s organization is designed so that the accounting, management of assets and the company’s financial affairs otherwise are controlled in a reassuring manner. The Managing Director shall manage the ongoing administration according to the Board of Directors’ guidelines and instructions and among other matters take measures that are necessary to fulfill the company’s accounting in accordance with law and handle the management of assets in a reassuring manner.

Auditor’s responsibility

Our objective concerning the audit of the administration, and thereby our opinion about discharge from liability, is to obtain audit evidence to assess with a reasonable degree of assurance

whether any member of the Board of Directors or the Managing Director in any material respect:

• has undertaken any action or been guilty of any omission which can give rise to liability to the company, or

• in any other way has acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.

Our objective concerning the audit of the proposed appropriations of the company’s profit or loss, and thereby our opinion about this, is to assess with reasonable degree of assurance whether the proposal is in accordance with the Companies Act.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted auditing standards in Sweden will always detect actions or omissions that can give rise to liability to the company, or that the proposed appropriations of the company’s profit or loss are not in accordance with the Companies Act.

As part of an audit in accordance with generally accepted auditing standards in Sweden, we exercise professional judgment and maintain professional scepticism throughout the audit. The examination of the administration and the proposed appropria-tions of the company’s profit or loss is based primarily on the audit of the accounts. Additional audit procedures performed are based on our professional judgment with starting point in risk and materiality. This means that we focus the examination on such actions, areas and relationships that are material for the operations and where deviations and violations would have particular importance for the company’s situation. We examine and test decisions undertaken, support for decisions, actions taken and other circumstances that are relevant to our opinion concerning discharge from liability. As a basis for our opinion on the Board of Directors’ proposed appropriations of the company’s profit or loss we examined whether the proposal is in accordance with the Companies Act.

Malmö / 2021Deloitte ABSignature on Swedish original

Maria EkelundAuthorized Public Accountant


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Adjusted EBITDA bridge

2020 2019 2018

Operating profit (EBIT) 340 295 186

Depreciation & amortization 308 298 260

Currency effects related to transfer of fixed assets and gains/losses on sold fixed assets 7 9 –

Reported EBITDA 654 603 446

Acquisition and integration costs – 29 96

Organisational restructurings 17 17 27

Other non-comparable costs 40 31 5

Non comparable costs 57 77 128

Adjusted EBITDA 711 680 574


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Head office & Manufacturer:Head office:Atos Medical ABHyllie Boulevard 17SE-215 32 MalmöSweden

Manufacturer:Atos Medical ABKraftgatan 8SE-242 35 HörbySweden

Australia:Atos Medical Pty Ltd www.atosmedical.com.au

Belgium: Atos Medical BVBA / SPRL www.atosmedical.be

Brazil:Atos Medical ltd www.atosmedical.com.br

Canada:Atos Medical Canada Inc www.atosmedical.ca

Denmark:Atos Medical Aps www.atosmedical.dk

Finland:Atos Medical AB www.atosmedical.fi

France:Atos Medical S.A.S. www.atosmedical.fr

Germany:Atos Medical GmbH www.atosmedical.de

Hungary:Atos Medical AB Magyarorszagi www.atosmedical.com

Italy:Atos Medical Srl www.atosmedical.it

Where to find usJapan: Atos Medical Japan Inc. www.atosmedical.jp

The Netherlands: Atos Medical B.V. www.atosmedical.nl

New Zealand:Atos Medical Ltd www.atosmedical.co.nz

Norway:Atos Medical AS www.atosmedical.no

Poland:Atos Medical Poland Sp. z o.o www.atosmedical.pl

Portugal:Atos Medical Spain S.L. www.atosmedical.pt

Spain:Atos Medical Spain S.L. www.atosmedical.es

Switzerland: Atos Medical, Switzerland www.atosmedical.ch

U.K: Atos Medical UK www.atosmedical.co.uk

U.S:Atos Medical Inc. www.atosmedical.us


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